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Put it in writing – Guidelines for file documentation

Documentation can help you avoid, or at least minimize, professional liability claims. It helps improve communication between your clients and staff. Documentation also provides value-added service to clients, while creating potential new services.

Certain engagements tend to increase client perception problems because the scope and areas of responsibility are unclear. Documentation is absolutely vital in these areas of your practice:

  • Aggressive tax positions
  • Business/investment advice
  • Financial or business management
  • Client funds handling
  • Management Advisory Services (MAS)
  • Mergers/acquisitions
  • Projections
  • Rent-a-CFO services
  • Systems analysis
  • Trustee work
  • Valuations/forecasts

Some general guidelines:

  1. Only facts should be documented – do not offer commentary, speculation or compile narratives about people or personalities.
  2. The file notes should be completed as soon as possible in a single set of client file which provides all team members with simple access to current communications.
  3. Documentation should be standard practice from top management to the most junior employee. A documentation protocol should be implement for all staff and all staff members must learn and use effective documentation skills.
  4. Develop a systematic approach that established key phrases and concepts and educate all staff on the use. Define expectations and actions.
  5. Seek a legal expertise about the documentation of any complex exchange and review all documentations before release it to your client.
  6. Keep a log of all phone calls and conversations with clients. A notepad, a computer log or a voice file for every client verbal exchange.

Always document significant communications and follow-up. It’s especially important to follow up with written communications in the following circumstances:

  • Change in the scope of an engagement
  • Client to take material action on discussion
  • Judgment calls (e.g., former CPA is taking an aggressive position that client is aware of and has consented to)
  • Negative knowledge (e.g., tax return is already late, or client is facing an audit)

A standard documentation protocol and evidence of all conversations may save a faulty memory or a later disagreement over the facts of a certain exchange or conversation and may avoid a lawsuit.

Jorgensen & Company are not attorneys and do not offer any form of legal advice. Consult with appropriately qualified local counsel for more assistance. Rickard Jorgensen is President & Chief Underwriting Officer for the CPAGold™ program and may be contacted at (201) 345 2440 or rjorgensen@jorgensenandcompany.com

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