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I have a client who recently started a new business. He and I had a verbal agreement that I would do all accounting, payroll, sales tax, etc. on a monthly basis.

I set up the client files on Quickbooks, prepared monthly sales tax, etc. Everything is ready to go... or so I thought...

It appears now that I've done all of this preliminary work he no longer wants my services. He basically fired me via a phone call, asked for all of the documentation back concerning his business, and is now hiring an accountant (for less money) who will use my documents and setup as a starting point.

I have no problem giving them HARD COPIES of what I have (assuming he pays my invoices and brings his account current with me but I do NOT want to send him the Quickbooks file that I created.

I was reading AICPA rule 501 and I interpret it as saying I must provide anything requested by the client (even electronic files) if available. I am not a CPA though. Do these rules still apply to me?

Am I obligated to send him the Quickbooks file or is it acceptable to give him ONLY hard copies of the work I prepared and move on with life?

flag	asked Oct 24 at 5:05 TaxQueries♦♦ 1,660●4●16

SandySea · Answer 1 · 2009-10-24 14:02:03Z UTC

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You do not have to provide your work product but yes, you have to give him back all his source documents and if he pays for the bills incurred you need to provide to him the work product as well.

Your workpapers that are internal in nature do not need to be returned to the client.

If you are not a CPA, then no these rules do not govern you per sanctioning but still they are a guideline if you want to have a good reputation.

answered Oct 24 at 14:02

SandySea
4,313●1●12

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The AICPA is a member organization and can only sanction its members. All states license CPAs, but only some still license "public accountants", and this is the agency that needs to be complied with. In any event, as Sandy stated, all that needs to be returned without payment of invoices are "source documents", or "books of original entry". Accountants' work product such as ledgers, journals, tax returns, etc. are not required to be provided without payyment for open invoices for such work. – Brent Berkman Oct 24 at 16:55

Cathi · Answer 2 · 2009-10-25 15:17:29Z UTC

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You must return his original docs he gave you but unless he pays you there is no obligation to hand over the work you did for him.

answered Oct 25 at 15:17

Cathi
251●4

dianeoffutt EA · Answer 3 · 2010-02-11 18:06:40Z UTC

ALWAYS give an engagement letter outlining the scope of work, payment, and termination procedures. Engagement letters offer you protection and it is ALWAYS asked when you are trying to buy Errors and Omissions insurance (which is critical for your business).

EAgent · Answer 4 · 2010-03-08 20:38:51Z UTC

I realize that my response is late by some 5 months, but I just found this thread and feel compelled - though I would not be surprised if no one read it.

Frankly, I don't see the problem here. You didn't charge him a set up fee because you anticipated getting more work from him - happens all the time in this business. BUT now that he's decided to leave he wants all the set up work - let him have it but make him pay for it.

He's entitiled to his source docs and your workproduct but NOT necessarily the mechanics of HOW you did what you did. The QB files are useless to him if doesn't have QB. And the files and methodologies you used to set up the business are NOT secrets, its just additional work that you weren't going to charge for because you were looking forward to a long term relationship.

In retrospect you SHOULD have charged a setup fee that you could have rebated after six months or so. But now your options include not giving him what he's asked for or charging him for the additional work.

Returning records to a deadbeat client?

4 Answers