Client Records Policy Statement

When a client service engagement is completed, original client records used by us will be returned to the client and not retained in our files as soon as practicable. If we believe an item needs to be retained for engagement documentation purposes, we will make a copy of the original for the file.  

You have an obligation to maintain your own original records and we do not assume any responsibility to maintain them.   

This is particularly important where a client submits copies to us; we expressly assume you will maintain control over the original documents from which the copies were made.  

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Definition of Firm’s Engagement Records 

Engagement working papers and files typically consist of the Firm’s original working papers, records of staff and client communications regarding the engagement, correspondence with clients and third parties pertaining to the engagement, copies of the work product provided to the client, and copies of client documents. 

Absent an express agreement with a client (for example, in an engagement to provide expert consulting services to an attorney where the attorney requires the CPA to turn over all working papers at the end of the engagement) Florida Statutes provide that the Firm’s working papers are the property of the Firm. These records may exist in electronic form such as e-mails, spreadsheets and even databases.

Because the types of records created or needed to perform an engagement vary substantially based upon the type of service rendered and the client’s industry, it is not possible to formulate a single record retention policy that can be used by all CPA firms.  

However, the below represent a fair approximation of the documents we believe properly belong to the Firm and not to the client:

• Annual tax return working paper files. These files may include information furnished by the client, engagement letters, firm-prepared working papers including checklists, tax research information developed in resolving tax return issues and questions, and working papers containing calculations and other data prepared in support of the tax return.

• File containing the firm’s copy of the final returns submitted to the client for filing with the tax authorities and a diskette or other electronic storage media containing the electronic files used to prepare and print the final returns.

• Permanent or carry-forward file containing information that will be needed on future return preparation engagements such as fixed asset depreciation schedules, copies of correspondence to/from taxing authorities such as requests for rulings and responses thereto.

• File containing copies of all correspondence and information sent to and received from the client and memoranda prepared in connection with this client.

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PROFESSIONAL GUIDANCE AND STATE LAW

ET Section 501 of the AICPA Code of Professional Conduct, Interpretation 501-1, “Retention of Client Records,” provides guidance about what constitutes client records (a copy of this will be provided upon request).

Excerpted:

When a client or former client (client) makes a request for client-provided records, client records prepared by the member, or supporting records that are in the custody or control of the member or the member’s firm (member) that have not previously been provided to the client, the member should respond to the client’s request as follows:

· Client provided records in the member’s custody or control should be returned to the client, including reproductions of such records.

· Client records prepared by the member should be provided to the client, except that client records prepared by the member may be withheld if the preparation of such records is not complete or there are fees due the member for the engagement to prepare those records.

· Supporting records relating to a completed and issued work product should be provided to the client, except that such supporting records may be withheld if there are fees due to the member for the specific work product.

Once the member has complied with these requirements, he or she is under no ethical obligation to comply with any subsequent requests to again provide such records or copies of such records. However, if subsequent to complying with a request, a client experiences a loss of records due to a natural disaster or an act of war, the member should comply with an additional request to provide such records.

Member’s working papers are the member’s property and need not be provided to the client under provisions of this interpretation; however, such requirements may be imposed by state and federal statutes and regulations, and contractual agreements.

In connection with any request for client-provided records, client records prepared by the member, or supporting records, the member may:

· Charge the client a reasonable fee for the time and expense incurred to retrieve and copy such records and require that such fee be paid prior to the time such records are provided to the client;

· Provide the requested records in any format usable by the client fn 2 ; and

· Make and retain copies of any records returned or provided to the client.

Where a member is required to return or provide records to the client, the member should comply with the client’s request as soon as practicable but, absent extenuating circumstances, no later than 45 days after the request is made. The fact that the statutes of the state in which the member practices grants the member a lien on certain records in his or her custody or control does not relieve the member of his or her obligation to comply with this interpretation. In addition, certain states have laws and regulations that impose obligations on the member greater than the provisions of this interpretation and should be complied with.

[Revised, effective April 30, 2000, by the Professional Ethics Executive Committee. Revised, effective April 30, 2006, by the Professional Ethics Executive Committee. Revised, effective February 28, 2011, by the Professional Ethics Executive Committee.]

 

Additionally, §473.318 Florida Statutes “Ownership of working papers” states:

“all statements, records, schedules, working papers, and memoranda made by a licensee or her or his employee incident to, or in the course of, professional services to a client, except the reports submitted by the licensee to the client and except for records which are part of the client's records, shall be and remain the property of the licensee in the absence of an express agreement between the licensee and the client to the contrary.”

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DEFINITIONS USED

· Member refers to a member of the American Institute of CPAs (we are Members of the AICPA).

· Client provided records are accounting or other records belonging to the client that were provided to the member by or on behalf of the client.

· Client records prepared by the member are accounting or other records (for example, tax returns, general ledgers, subsidiary journals, and supporting schedules such as detailed employee payroll records and depreciation schedules) that the member was engaged to prepare for the client.

· Supporting records are information not reflected in the client’s books and records that are otherwise not available to the client with the result that the client’s financial information is incomplete. For example, supporting records include adjusting, closing, combining, or consolidating journal entries (including computations supporting such entries) that are produced by the member during an engagement (for example, an Audit).

· Member’s working papers include, but are not limited to, Audit programs, analytical review schedules, and statistical sampling results, analyses, and schedules prepared by the client at the request of the member.

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Please call us at 407-812-8490 or send an email to tax@ralliscpa.com if you would like more information on either of these very important policies.  

 

 

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