CHAPTER 1 - LIABILITY PROTECTION
AND THE FORM OF YOUR FIRM
1.0
Introduction
1.1 Traditional
Forms Of Practice
1.1.1 Sole
Practitioner
1.1.2 General
Partnership
1.1.3 Professional
Association
1.2 Development Of
Limited Liability Entities
1.2.1 The
Corporate Form, Generally
1.2.2 Professional
Corporation
1.2.3 Limited Liability Partnership And
Limited Liability Company
1.3 Selecting The
Right Organizational Form
1.4 Conclusion
CHAPTER 2 - ENGAGEMENT LETTERS
2.0 Introduction
2.1 The Contract
With Your Client
2.1.1 Prevent
Differences In Expectations
2.1.2 Take On The
Difficult Issues Up Front
2.1.3 Condition
Your Client To Respect Your Interests
2.1.4 Tailor Your
Letter To Your Engagement
2.1.5 Create
Letters Early And Often
2.2 Defining Your
Engagement
2.2.1 Identify
Your Client
2.2.2 Identify The
Scope Of Your Services
2.2.3 Identify
Your Timetable
2.3 Mutual
Responsibilities
2.4 Limitations Of
Your Engagement
2.5 Fee Agreement
CHAPTER 3 - THE SARBANES-OXLEY ACT OF 2002
3.0 Introduction
3.1 Overview of
the Act
3.2 Public Company
Accounting Oversight Board (“PCAOB”)
3.2.1 Registration
3.2.2 Rulemaking
3.2.3 Inspections
3.2.4
Investigations
3.3 Provisions of
Greatest Importance to Auditors
3.3.1 Document
Retention
3.3.2 Review of
Audit Work
3.3.3 Review of
Internal Control Structure and Procedures
3.3.4 Quality
Control
3.3.5 Auditor Independence
3.3.5.1 Prohibited Services
3.3.5.2 Partner Rotation
3.3.5.3 Reporting to Audit Committees
3.3.5.4 Conflict of Interest
3.4 Provisions
Relating to Management
3.5 Civil and
Criminal Proceedings
3.6 Possible
Cascade Effect
3.7 Conclusion
CHAPTER 4 - DETECTING CLIENT
FRAUD, THEFTAND OTHER ILLEGAL ACTS
4.0 Introduction
4.1 Professional
Standards
4.1.1 Auditing
Standards
4.1.2 Accounting
And Review Standards
4.2 Overview Of Claims
4.3 Protective
Measures
4.3.1 Planning And
Evaluating
4.3.2
Communicating And Documenting
4.3.3 Engagement
Letters
4.3.4 Performing
And Concluding Your Engagement
4.4 Conclusion
CHAPTER 5 - PROTECTING CLIENT
CONFIDENTIALITY
5.0 Introduction
5.1 Basic
Principles Of Protecting Client Confidentiality
5.2 Impact Of
Federal And State Law
5.3 Client
Requests For Information
5.3.1 Individuals
5.3.2 Business
Organizations
5.3.3 Redundant
Requests
5.4 Third-Party
Requests For Information
5.4.1 Informal
Requests
5.4.2 Formal
Requests
5.5 Conclusion
CHAPTER 6 - REJECTING OR
WITHDRAWING FROM CLIENT ENGAGEMENTS
6.0 Introduction
6.1 Knowing When To Reject And Withdraw From Engagements
6.1.1 Prospective
Client Engagements
6.1.2 Existing
Client Engagements
6.2 Documenting
The Rejection Or Withdrawal
6.3 Cooperating With Your Client Or A
Successor Accountant After Disengagement
6.4 Sample
Disengagement Letter
6.5 Conclusion
CHAPTER 7 - FEE COLLECTION
7.0 Introduction
7.1 Improve Your
Billing Practices
7.1.1 Retainers
7.1.2 Regular
Billing
7.1.3 Payment On
Delivery
7.2 Competing
Concerns
7.3 Negotiation And Compromise
7.4 Assess The
Risk Of A Counterclaim
7.5 Assess
Materiality
7.6 Consider
Applicable Statutes Of Limitation
7.7 Conclusion
CHAPTER 8 - FILE RETENTION
8.0 Introduction
8.1 Retaining v.
Discarding Files
8.2 Existing
Clients v. Former Clients
8.3 Contents Of
Files
8.4 Statutory And
Regulatory Considerations
8.5 Litigation
Considerations
8.6 Sample
File-Retention Policy
8.7 Conclusion
CHAPTER 9 - LIABILITY EXPOSURE
TO THIRD PARTIES
9.0 Introduction
9.1 Introduction
To Third-Party Liability
9.2 The Privity
Standard
9.3 The
Near-Privity Standard
9.4 The
Restatement Standard
9.5 The
Foreseeability Standard
9.6 Protecting
Yourself From Liability To Third Parties
9.7 Privity
Letters
9.8 Conclusion
CHAPTER 10 - ALTERNATIVE DISPUTE
RESOLUTION
10.0 Introduction
10.1 ADR
Techniques
10.1.1 Mediation
10.1.2 Arbitration
10.2 Agreements To
Engage In ADR
10.3 Engagement
Letter Provision Invoking ADR
10.3.1 Mediation,
Then Arbitration
10.3.2 Mediation
Only
10.3.3 Arbitration
Only
10.4 Agreeing To
ADR After A Claim Is Asserted
10.5 Conclusion
CHAPTER 11 - DEFENDING AGAINST
CLAIMS OF NEGLIGENCE
11.0 Introduction
11.1 Overview
11.2 Contributory
Negligence
11.3 Assumption Of
The Risk
11.4 Last Clear
Chance
11.5 Comparative
Negligence
11.6 Protective
Measures
11.7 Conclusion
CHAPTER 12 - CLAIM REPORTING
12.0 Introduction
12.1 Overview Of
Matters Covered Under A Typical Policy
12.2 Matters That
Must Be Reported
12.3 When Must You
Report A Claim Or Incident?
12.4 How To Report
A Claim Or Incident
12.5 How To
Proceed After Providing Notice Of A Claim Or Incident
12.6 Personal
Counsel
12.7 Risk
Management Hotlines
12.8 Conclusion
