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Professional Clearance Letter Re Disengaged Client

Professional Clearance Letter Re Disengaged Client

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We recently disengaged a client due to difficulty in obtaining records when requested, failing to provide explanations to us and generally reluctance to work with us when dealing with their business affairs.

We have recieved a letter from the new accountant, and whilst we usually begin by saying 'we have no professional or ethical reason that they should not accept this appointment' - i feel that it is not disclosing the full picture regarding our dealing with this particular client.  Or is it actually just our 'judgement' that they were a difficult client and that should not come into whether a new accountant takes them on.

Any guidance most appreciated.

Replies (24)

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By ShirleyM
18th Apr 2013 09:06

Personally, I wouldn't say anything

As you have disengaged, the client may at last realise the error of their ways and be more cooperative with the new accountant.

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By andy.partridge
18th Apr 2013 09:48

I would allude to it

Just as I would want another firm to tip me off. If things are difficult early on in your relationship with a new client and you know they have history you can make an early judgement as to whether you can get them to mend their ways or if you want to continue with them.

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By johngroganjga
18th Apr 2013 10:10

Assuming you have client's authority to communicate with new accountant, a middle course would be to make no mention in the letter but to phone the other accountant to explain the problems.

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By thomas
18th Apr 2013 10:19

I would call the accountant. An accountant did this for me and it was really nice to be forewarned about my new client....(and I wish I had walked away now)

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Locutus of Borg
By Locutus
18th Apr 2013 10:47

Agree with ShirleyM
I wouldn't say anything about the former client's conduct in writing or by phone.

If the former client finds out then you expose yourself to a claim for libel / slander, albeit that any action against you would be unlikely, particularly if you have good grounds for your views.

Just move on. Maybe the former client will learn from the experience. Maybe they won't. Not your problem anymore. The new agent will just have to work on those failings.

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Replying to andredavies:
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By andy.partridge
18th Apr 2013 16:22

Amusing

0103953 wrote:
If the former client finds out then you expose yourself to a claim for libel / slander.
If there is any accountant truly worried about this I really don't know how they manage to pluck up the courage to sign a set of accounts.
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By clearline
18th Apr 2013 10:49

Thanks for all the responses, I just wanted to ensure that any way we chose to act was within guidelines.

 

 

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Teignmouth
By Paul Scholes
18th Apr 2013 12:18

Does the accountant ask for "any other information....

that you feel may be ouf use to us"?

As we send clients annual tax return & accounts packs in PDF containing all the normal docs, plus cover letters management letters etc and suggestions for improvement, I always just give these to the new accountant.

Unless the client has qualified what they will allow you to say to the new accountant or the new accountant has said "don't tell me any nasty stuff" then why wouldn't you tell them?

Look at it the other way around, wouldn't you want to know? Doesn't mean it will be the same for you but better you are put on notice and don't go through the same that all the previous accountans have been through.

Bit like a public sector cowboy accounant I heard of recently (on £60K pa) who is likely to be moved sideways to an unsuspecting department rather than being sacked.

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By jamiea4f
19th Apr 2013 11:14

Professional clearance letter

Personally I have had this situation a couple of times, in one situation the clients in question were friends with the new accountant so I explained over the phone the problems I experienced with them (basically sending me figures and then sending over amended figures with no explanation of the differences), I dont know what action the new accountant took but I never heard anything.  On the second occasion I informed the new accountant in writing (and the client) that she should have registered for VAT a long time ago and explained the possible outcomes for her, I did also explain my concerns to the new accountant face to face and they seemed fine with it.  I must also point out that the second client told me she was leaving because one of her "friends" would be doing her accounts, which turned out to be false.  Sometimes some clients are better off elsewhere!

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By carnmores
19th Apr 2013 11:44

keep your trap shut for obvious reasons

isnt disengage a horrible word , something to do with letting go of something that holds fast.

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Stuart Walker Yellow Tomato Copy
By winton50
19th Apr 2013 12:53

Not sure you can be sued for an opinion

If you were to say that you felt that in your opinion information wasn't forthcoming and that explanations were unhelpful then surely that's just your opinion.

As long as you don't say the client is a bad lot and they should steer clear then I can't see how you can be held liable.

Mind you I'm an accountant not a lawyer so don't take anything I say as gospel...

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By DMGbus
19th Apr 2013 13:10

Say nothing or...something suitably vague

If I felt it necessary to say anything I'd just say "I found it difficult to efficiently deal with this former client's needs".

This doesn't libel the client by labelling them as difficult, but leaves it open to the new advisor to "read between the lines" and former his/her own opinion.

 

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By JDBENJAMIN
19th Apr 2013 13:34

Just be truthful, and you cannot be sued.

Responses to professional enquiry letters are covered by qualified privilege, and therefore even if you say something that is factually wrong you cannot be sued by the ex-client unless it was malicious or reckless. As long as you thought what you said was right and relevant, you are quite safe. On the other hand, if you fail to disclose a material fact to the incoming accountant, you could be sued for that. Therefore just tell the complete truth. I have several times told incoming accountants about problems with their prospective clients. Not to do this would be not responding to their letter properly.

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By npreynolds
19th Apr 2013 13:51

Jamiea4f 19/4/13

Hi jamie

 

you referred to a second occasion. I must say that if you suspect that the ex-cleint changed accountants because of your advice to register for vat then i would have thought this was a matter for your MLRO. Please don't tell us you reported the matter - that might constitute  tipping off. Further it might be that ethically you should not have given clearance. This is not an easy area, i dont know your qualification but ethics department of ICAEW are good at advising in this area. The matter iof clearance is academic as the client has gone, but the MLRO can still reports if he deems fit.

 

regards

N

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By paddy55
20th Apr 2013 03:34

Inform new accountant

You should consider the following 1) whether you would be breaching your contract of confidentiality with your previous client and b) whether you would be exposing yourself to an action for defamation.

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By BKD
20th Apr 2013 09:22

Just make sure ...

... that the new accountant knows that it was you that disengaged the client, and not the other way around. You don't need to say why - they can draw their own conclusions, but may feel inclined to phone you for more info. Provided that you stick to the facts (if you have paperwork that demonstrates that client was difficult to deal with - repeated reminders, for instance) you should be OK.

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Jessica Pillow
By Jessica Pillow
20th Apr 2013 22:42

Ask Institute

Hi

I had a similar situation to this and for once, ICAEW were really helpful.  They wrote the professional clearance letter for me (or told me what to write)!

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Replying to chatman:
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By clearline
22nd Apr 2013 13:03

and what did it include or omit?

 

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Replying to chatman:
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By clearline
22nd Apr 2013 13:04

ICAEW

pillowmay wrote:

Hi

I had a similar situation to this and for once, ICAEW were really helpful.  They wrote the professional clearance letter for me (or told me what to write)!

 

What did it include/omit?

 

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Replying to andy.partridge:
Jessica Pillow
By Jessica Pillow
23rd Apr 2013 12:13

ICAEW

It was fairly vague and written in legal speak but it did clearly say that there was a problem which would give the new accountant the opportunity to enquire further if they wanted to.  I was also advised not to send over the information requested until I'd heard back from the new accountant as to whether he was actually going to act or not.  The new accountant just requested the information to be sent over and did not ask for any other details.

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By Roy Price
22nd Apr 2013 11:55

Disengaged client

I had a client for whom I had to disengage primarily due to lack of co-operation and communication, failure to pay bills and failure to comply with paye procedures.  I had disengaged shortly after their year end recommending them to find another accountant.  8 months later up pops a new accountant.  Personal I concluded that the fact I had decided to disengage and the back ground reasons was enough of a Professional Reason why the new accountant should be aware when taking on the assignment; he can form his own opinion.  I would expect the same when taking some one new on.

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Morph
By kevinringer
22nd Apr 2013 13:17

I would want to know if I was the new accountant

So when this happened to me I didn't put anything in the letter. Instead I phoned the new accountant.

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By paddy55
22nd Apr 2013 23:55

Disengaged client

Phoning the new accountant instead of writing to him may not be all of the solution that it appears to be. In court proceedings, the new accountant could be sub-poened as a witness and forced to disclose u nder oath what you had told him.

Some organisations such as banks take their client confidentiality obligations so seriously that they will not even confirm that a specified person is or was a client of theirs.

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Morph
By kevinringer
23rd Apr 2013 08:52

The purpose of phoning is not because of confidentiality

The purpose of phoning is because the matter lends itself better to a discussion rather than putting in a letter. In the one disengagement case that I have had there was a series of events which cumulated in my disengaging the client. A letter would have required quite a lengthy explanation whereas during a discussion you can ascertain the new accountant’s knowledge of their new client and thus decide what items may require further explanation and what might not. I have only ever disengaged one client, but I phone the new accountant in all cases whether there are contentious issues or not. In one case it transpired that the new accountant was related to their new client and had not really wanted to be engaged but felt they had to for family reasons which I won’t go into. Knowing that they were related enabled me to highlight an issue concerning another family member. In every case the new accountant has always expressed gratitude for my phoning because fore warned is fore armed. I must point out that I am not breaking confidentiality because I have already obtained the ex-client’s authorisation to disclose anything I feel is relevant. And the purpose of phoning is not to avoid putting things in writing which might be subjective. The purpose is simply that a conversation is more effective for both old and new accountant than a letter.

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