CPAs that are not familiar with third party verification requests should count themselves lucky. Association of International Certified Professional Accountants. Often, your HR contact will compose the letter for you or provide you with a template to give to your manager. Our history of serving the public interest stretches back to 1887. 3 0 obj This tradition is supported through the requirements of various legal, professional and ethical standards, including Internal Revenue Code (IRC) § 7216. Possible impact on a self-employed client’s business if money is withdrawn to fund the down payment on a real estate purchase. In many cases, the requesting third party has other options available to fulfill their needs, but sees the CPA as a path of least resistance. cc: [Client Name] (Client) 2 0 obj As a result, you agree to indemnify and hold our firm and any of its partners, principals, shareholders, officers, directors, members, employees, agents or assigns harmless from any and all claims arising from the use of the tax returns for any purpose other than filing with the IRS and state and local tax authorities, regardless of the nature of the claim, including the negligence of any party.”. The lender may then take the position that the representations made in the letter were a substantial factor in its decision to extend credit. Sincerely, The letter should also include a reminder to the third party of their responsibility to perform their own assessment of the information for their purposes, usually assessing the credit worthiness of a borrower. obtain client consent in a format specified by the IRS before you send such a letter. CPAs are regularly asked to provide a loan broker, lender or other third party with a comfort letter or verification letter on behalf of their clients. This article provides information, rather than advice or opinion. Third parties are responsible for performing their own due diligence rather than relying on a representation or verification of information by a CPA. Employment Verification Letter Sample and Templates. Certain CNA Financial Corporation subsidiaries use the "CNA" trademark in connection with insurance underwriting and claims activities. ABC Company Appendix B – Sample Tax Return Transmittal Letter Language When we see legislative developments affecting the accounting profession, we speak up with a collective voice and advocate on your behalf. However flattering such requests may be, CPAs should exercise caution upon receiving third party verification requests to ensure an appropriate response. This is especially true when the requested representations are outside the scope of the CPA’s engagement and the requested verification relates to information that comes from the client, for which the CPA has no first-hand knowledge. From the AICPA Technical Hotline If a client asks the CPA to send information directly to a third party, the CPA must obtain the client’s signed written consent prior to doing so. Client Engagement Acceptance and Continuance, Third-party Verification Toolkit for CPAs. They are not intended to benefit or influence any third party, either to obtain credit or for any other purpose. As a result, the lender may attempt to recover its loss by suing the CPA, alleging that it detrimentally relied on the negligent misrepresentation(s) made in the letter. How will CPAs encounter professional liability risk related to a verification letter? ��~(TD:t� ml� o� #}�������'o^��rW����b8F1H���R��]�ҳ_Z�"+����%���9�>^��r�P�}��˕I'�T��ɺ3���y�P��. Some lenders make requests for the CPA to provide information regarding their clients that the CPA cannot provide (e.g. Copyright © 2018 CNA. Ŧ8=!��兡�ۖ�G��?�� -�I�� 1�?���t/KlrQ���.Y��g7���g7����S�I��LwY��� 1��BJ���͚d� If the request is for tax return information, the consent must be in compliance with IRC § 7216. The CPA license is the foundation for all of your career opportunities in accounting. City, State ZIP See the AICPA’s. solvency request). Avoid confirming any client information to a third party. The recommended template below may be copied onto letterhead or recreated with the same content and printed on letterhead. The letter should also include a reminder to the third party of their responsibility to perform their own assessment of the information for their purposes, usually assessing the credit worthiness of a borrower. And as you look at what you’re being asked to “certify”, keep in mind that CPAs are prohibited from providing assurance on solvency. See the AICPA’s. Additionally, questions may be submitted electronically by filling out the hotline form. But it's one that will reap big rewards if you choose to pursue it. Even after offering one of these practical solutions, clients may continue to implore you to provide the specific representation that a lender, broker or other third party is seeking.
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