Practitioners love helping their clients, and their clients love asking for help. Where these requests are outside of the service provision that has been agreed upon, or when the request comes directly from a third party, a practitioner should think twice about fulfilling the requests. Even where the additional request is generated internally, a practitioner should proceed with caution.
The following types of requests will be considered:
- Third party requests;
- Client requests; and
- Internal requests.
Third party requests
Third party requests can come in many forms and from many different sources. Examples include: a client’s lender, customer, supplier, lawyer, or employee; the CRA; or even the police. With a variety of sources come a variety of requests. Regardless of where the request comes from or what the specific request is, a practitioner is expected to consider confidentiality, privacy, and consent, among other things.
The CPABC Code of Professional Conduct1 (the “Code”) Rule 208 addresses ‘confidentiality of information.’ Rule 208 references consent and privacy legislation. The Code defines ‘confidential information’ as well as ‘consent’ on page 10. The provincial privacy legislation, ‘Personal Information Protection Act’ (“PIPA”)2 has been in place for many years and should also be complied with.
Let us use a lender request as an example. As a practitioner, it is not uncommon to receive a call or letter from your client’s lender in which they are making a request. They could be asking for information, a conversation, a verification, a representation, an attestation, or a host of other things. Fulfilling such a request could easily result in a lawsuit. Best practice is to not complete the request and contact your client directly. The scope of your work is based on what is contractually agreed upon in the engagement letter between the firm and the firm’s client. Providing anything to the third party will more than likely put you offside from a Code perspective, as you would be providing information that is confidential and for which you have not received the consent from your client to divulge. Even if the client is willing to provide consent, it is best practice is to provide the information to the client and let the client provide it directly to the third party. The same holds true for requests from your client’s lawyer or even the CRA. If you are unsure, talk to a lawyer.
There is an exemption from Rule 208 ‘Confidentiality of information’ related to Rule 302 ‘Communication with predecessor’, but even in these cases it might be prudent to obtain specific consent from the client first.
Next, we look at client requests. These are not the typical requests for an audit, review, compilation, or tax return, instead we are referring to the requests that come up while executing one of the aforementioned engagements. They typically are offhanded questions, for example “do you think I should sell this property?” A practitioner’s initial thought might be to answer the question to be helpful, but caution should be taken with such questions as they often require additional consideration and a detailed analysis. Providing an immediate answer could get you in trouble under Rule 203 ‘professional competence’, Rule 202 ‘integrity and due care and objectivity’, and Rule 201 ‘maintenance of the good reputation of the profession’.
All of the above Code violations (Rules 201, 202, 203, and 208) could occur from providing information to your client when certain events have occurred. An example of such an event could be the breakdown of a marriage where each spouse may be motivated differently. Another example may be a child turning 18 years of age and no longer wanting their parents to know what is on their tax return.
The last type of request deals with internal requests, or things that are brought up by yourself or your team. As an example, a practitioner may discover a mistake in a tax return or a calculation feeding into the tax return, however, luckily this mistake does not impact taxes payable. The initial response might be to attempt to fix the issue by filing an amended return. However, the practitioner should be seeking the client’s permission before making any amendments to a finalized return. Another common scenario would be a request for the tax authorities to grant an extension. Best practice would be for practitioners to obtain approval for this from their clients prior to contacting the tax authorities
- Public Practice Knowledge Base Collection - Client Relations
- Public Practice Knowledge Base Collection - the Code (excluding independence)
- Considerations before sending client information to third parties
- Considerations when issuing management letters
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