Joel L. Sinkin, Joel L. Sinkin. After price, payment terms and non-compete agreements, transition is the most important item in the offer. It is scheduled to take place officially on May 1, 2009. 7216, are available to members of the AICPA Tax Section at. Consult with an information technology specialist with knowledge of the software being used prior to providing backup files of client records and relevant firm working papers. My final day of work will be May 1. IRS Circular 230 Notice: The discussion of U.S. federal tax law and references to any resources in this material are not intended to: (a) be used or relied upon by any taxpayer for the purpose of avoiding any federal tax penalties; (b) promote, market or recommend any products and/or services except to the extent expressly stated otherwise; or (c) be considered except in consultation with a qualified independent tax advisor who can address a taxpayers particular circumstances. CPA Firm. Be proactive in your tax planning and in all interaction with your clients. R1.4 Sample Letter to a Predecessor Accounting Firm . cessor firm's expertise in customized letters to each type of client.) On the part of the predecessor, there must be readiness to co-operate with the successor, although client documents may be withheld where there are fees owing to the predecessor by the former client. The appropriate timeframe depends on the type of services the firm offers, and the skill-set of the buyer. Some are essential to make our site work; others help us improve the user experience. However, there are several things we want to At the end of the meeting, the buyer of the accounting practice hands you an engagement letter related to services to be provided to you personally and for your business. It helps to also know what bank requirements are for the non-compete section. A prudent seller will go to great lengths to meet with multiple buyers in the interest of selecting the best buyer who meets all of these criteria. Clients are purchasing "invisible" services from . An affirmative statement should be made that the CPA buyer was selected because he or she was the most outstanding of several under consideration. Assistance with the associated legal and defense fees in the event of a lawsuit for errors and omissions. There is a "sweet spot" for firms. For more information or to make a purchase or register, go to aicpastore.com or call the Institute at 888-777-7077. services we have provided you in the past will continue. growth and development of our professional staff has evolved in a We City, State ZIP around May 1. Our mission is to provide essential resources for being a great partner and a great firm, Keeping it Together: Plan the Transition to Retain Staff and Clients. Inform them about the extensive search that was undertaken to find a highly qualified CPA who would be the best fit for the firm's clients. Your resignation might cause your client significant harm, and litigation is much more likely to occur. Change too many things too fast and you risk losing clients. In the event the practice (or a portion thereof) is being sold, consider the cost of this activity prior to reaching a final agreement on the terms of the sale. We conducted an extensive If the working paper files are in an electronic format, the predecessor firm should take steps to safeguard the integrity of the data and to segregate client records from firm working papers. The transition plan is not commonly part of the closing documents, but it is just as important. The predecessor firm should also consider obtaining an acknowledgement letter from the successor firm restricting use of the working paper files. The successor firm will maintain the working papers in accordance with the confidentiality requirements of AICPA professional standards, applicable board of accountancy rules and regulations, and other applicable laws, rules and regulations, including those applicable to the subject clients. A successful purchase agreement should be written so that everyone understands the terms of the contract and can move forward with ease and assurance in a timely manner. The key to successfully navigating a deal through the contract negotiation process is to avoid spending too much time on everything else. If you are considering buying or selling a CPA Firm, Poe Group Advisors can help. stream Too many changes too soon in the relationship could drive many clients to start looking for another CPA. & Co. will be moving their offices to our existing offices are pleased to announce our forthcoming merger with XYZ & Co. How your firms file retention policy is applied in this situation and any specific considerations regarding file retention. Transition Period During the sale of a CPA firm, the buyer and seller will negotiate the length of the transition period. They include billing related issues such as unpaid fees, a history of late payments, or poor recoveries. Maintain an upbeat demeanor in all communications. We are confident Typically, a respected figure in the CPA's professional or academic life, such as a professor, supervisor or previous client writes the letter on the applicant's behalf. It is important to seek legal counsel prior to announcing a sale or merger to clientsor employees, for that matter. Some are essential to make our site work; others help us improve the user experience. You need to reassure them that the things they depend on will not change, emphasize continuity regardless of what is changing, focus on things that are not changing and stress what the client is gaining rather than losing. 2Prior to using this sample client authorization letter, CPAs should become familiar with federal and state laws and regulations to ensure compliance with specific regulations concerning consent to disclose confidential client information. The buyer is almost impossible to reach on the phone. . AICPA Member Insurance Programs expertise, and an environment our clients and associates want to You Find out more about the UHT and when it applies. directly related to the success our clients have had in their The plan should be referred to often over the course of the transition. Merging with or acquiring another firm is an exciting moment of opportunity and growth. The successor firm will maintain and dispose of the working papers in accordance with the predecessor firms record retention policy. Vitamin D - Are you getting the right amount? Let's get started. This, of course, is different from a situation where a firm might have to terminate an engagement in order to avoid being associated with unethical or illegal activities. growth over the past several years. Little things can make a difference in perception. When effectively written, such a letter can ensure that the client feels that you have considered the decision thoroughly and that you have also considered their interests along with your own. 4. This site uses cookies to store information on your computer. As indicated in my November 2015 JofA article "Maximize Proceeds in Accounting Firm Sales,"the most important aspect of any deal from a seller's perspective should be whether the buyer has the qualifications, ability, capacity, desire, and incentive to provide quality service to the seller's soon-to-be former clients. Within the first month you find that the buyer will only communicate via email while the seller previously conducted extensive phone consultations. & Co. exceeded our hopes for a firm we can combine with and business and personal pursuits. Sample Client Authorization for Working Paper File Access/Copying (Other than Income Tax Clients) (Predecessor Firm Letterhead). If you are buying or selling a CPA Firm, your purchase agreement should cover these five essential deal terms accurately, completely and simply. CPA Firm Mergers & Acquisitions: How to Buy a Firm, How to Sell a Firm, and How to Make the Best Deal. Section 301.7216-3 and Revenue Procedure 2008-35. have decided to seek a merger with another firm because we believe On that date Unfortunately, due to current circumstances ACC ACCOUNTING FIRM are obliged to terminate agreements with some of our clients, including CLIENT. Be prepared to smooth over client relationships in the rare instance of a client's becoming irritated with the buyer. Imagine that you own a growing and successful multimillion-dollar business. you have any questions about this exciting news and what it will Full disclosure by a widow or widower (or his or her representative) of the contingent financial arrangement coupled with an appeal to the better aspects of the clients' nature will most often elicit sympathy for the CPA and his or her familythus facilitating client retention. Appendix F: Sample Transition Letters. Most jurisdictions will not enforce non-compete agreements that cover too much geography or too long a period of time. will continue to work with the same people in our firm you have If the successor firm will take possession of any original working papers, the predecessor firm's attorney should consider including the following provisions in the agreement: 1Metadata is vital information hidden within an electronic file about the file data. By thinking through the steps and asking the right questions, the buyer can make a calculated offer that both seller and buyer can be comfortable with. . If so, how will they be returned to the client? A form outlining the information required to be documented, such as the facts and circumstances leading to the decision to terminate the relationship. Please ensure the email address or telephone number you provide is secure or private. Practitioners should issue a qualified opinion, an adverse opinion, or a disclaimer of opinion where appropriate. The additional guidance to Rule 302 is as follows: The attention of registrants is drawn to the provisions of various federal and provincial statutes, and to any regulations, guidelines or policy pronouncements issued pursuant to such statutes, which place requirements on the acceptance of audit appointments. If you are. Rule 302.2 requires a registrant to respond promptly to a communication of this nature and to advise whether or not the registrant withdrew or resigned from the engagement. However, there are several things we want to point out Most of the high-level information is gathered through inquiry. The predecessor firm is the exclusive and continuing owner of working papers generated by the predecessor firm. You tell your CPA and his buyer that you will look at the agreement in the next couple of days. There is no fee or obligation for this service. Subscribe and receive the information that matters to you. Browse our collection of lessons-learned, insights and observations borrowed from our books, work, life and on-going client relationships. Fixed pricing also helps both parties in the deal, generally resulting in better transitions. })}); Search our current accounting practice listings based on the qualities important to you. The Your family and your business have been the clients of a CPA in the local community for more than 15 years. We are engaging XYZ CPAs to provide services to us in the future. to previous paragraph]. Mailing the announcement letter in the predecessor's envelope but writing it on the successor firm's letterhead ensures the letter will be opened and sends a powerful but subtle message about the transition. Any such appeal made to clients should be warmhearted, passionate, and sincere while maintaining a high level of professional decorum. Or too long a period of time seller will negotiate the length of the working File. 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