CPA Practice Advisor

NOV 2018

Today's Technology for Tomorrow's Firm.

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12 NOVEMBER 2018 ■ www.CPAPracticeAdvisor.com THE FIRM MANAGEMENT CHANNEL 5 Types of Clients CPA Firms Should Avoid By Cathy Whitley and Mark Walicki Emily Ryan was a hard-working CPA who in the early days of her career began doing the tax work of an up-and-coming actor. Over time this actor became a big star nationally but continued to stay connected with those who had helped him achieve his goals. This included Emily, who had recently started providing consultative type services in addition to his tax returns. As the actor’s salary continued to increase, Emily’s partners were very happy to expand their business relationship with him. The star was well known throughout the office. They often allowed him to hand out movie premiere tickets and memorabilia as a courtesy to the staff or in lieu of payment and agreed to services with just a handshake. He even accepted a personal referral from one of Emily’s partners despite the lack of qualifications. Emily grew increasingly uncomfortable with how the client relationship was proceeding and expressed her concerns to her partners. However, no one else wanted to ‘rock the boat’ by asking the actor to forego the perks over something as trivial as an engagement letter. Over time, the actor became more and more demanding. He started asking Emily to book flights, find him hotel rooms and make dinner reservations. Oftentimes, he would angrily complain that she failed to do things he requested of which Emily had no recollection. When Emily decided to accept a job with another firm, she decided to leave the actor client with her former colleagues. Several years after her departure, she read in the newspaper that her former firm was being sued by the actor. The claim cost them a great deal of money, and the news stories about the lawsuit and court proceedings put a black mark on the firm’s reputation. What did the firm do wrong? ■ No engagement letter was ever used ■ They provided an array of concierge-type services outside the scope of accounting ■ There was no annual client review performed by the firm ■ Only one referral was offered when the client needed assistance outside of the firm Evaluating your clients on a routine basis is good business practice. Over time, a client’s profile and expectations may change, no longer making that client a good fit for your firm. Though not an easy task, disengaging from risky clients can be your best option. It may hurt financially in the short run, but in the long run it can save you a great deal of aggravation and avoid a potential professional liability claim. In Emily’s case, she was aware that her client’s profile was changing and that her former firm was not willing or capable of handling such a demanding high net worth individual. Continue reading at www.CPAPracticeAdvisor.com/12435093 Mark Waliki is an advisor with the AICPA Professional Liability Insurance Program. Cathy Whitley is senior AICPA Risk Advisor for AON Insurance Services. LATEST FIRM MANAGEMENT NEWS 400 Indiana CPAs Join Forces for Day of Service. Teams from 36 firms and organizations completed 31 service projects in 15 Indiana towns. www.cpapracticeadvisor.com/12433433 Moss Adams Acquires BPW&C. The Albuquerque-based firm works with a diverse spectrum of middle-market and family-owned businesses. www.cpapracticeadvisor.com/12433670 Baldwin CPAs Expands in Louisville, Kentucky. Effective October 29, 2018, Lindemeyer, CPA in Crestwood will merge into Baldwin CPAs. www.cpapracticeadvisor.com/12433222 Baker Tilly Acquires MRZ. MRZ is one of the fastest-growing accounting firms in Houston. www.cpapracticeadvisor.com/12432620 2019 Accounting MOVE Project Survey Opens. The study examines perceptions and misperceptions that women and firms have about how and why women pursue partnership and other senior leadership positions. www.cpapracticeadvisor.com/12433700 THIS MONTH'S TOP FIRM MANAGEMENT SOCIAL MEDIA POSTS ■ 10 Reasons Your Accounting Firm Needs a Bookkeeping Robot. ReceiptBot. https://bit.ly/2yFogzs ■ 4 Strategies to Capture the Hispanic Market. AICPA Insights. https://bit.ly/2qcsF8w ■ The Ultimate List of Advisory Services for Accountants. Accountants Accelerator. https://bit.ly/2OfI7ui ■ 3 Ways Small Firms Can Turn Challenges into Opportunities. AICPA Insights. https://bit.ly/2zbRlCn ■ Are You Charging Enough for Your Services? Long for Success blog. https://bit.ly/2Ssvr6y

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