THE CPA MANAGER

WHEN THE CLIENT ASKS FOR Y2K SERVICES

By Suzanne M. Holl

Help! Some of my clients are pressuring me to provide Y2K consulting services or refer them to someone else. What, if anything, should I do without further exposing myself to undue risk of a Y2K claim?

It is tempting at times to bury one's head in the sand, but this does not adequately meet the needs and interests of clients. As such, CPAs are finding themselves in a position of having to do something to maintain good client relationships. However, to try and minimize risk of a malpractice claim it is paramount to document.

For most CPAs, defining "do something" can be somewhat stressful and challenging. One of the first steps, however, should be to assess your competence and your risk tolerance in Y2K consulting. Exhibit 1 might help in this endeavor. It gives my view of the risk levels for various Y2K services.

If you are currently providing computer consulting services and are knowledgeable about the issues and problems related to Y2K compliance, offering Y2K consulting services is not necessarily a bad thing. However, proceed with caution. Have a clearly defined, separate engagement letter that spells out the scope and limitations of your Y2K consulting engagement. Avoid using words in your engagement letter that can expand rather than limit the scope of your services (e.g., assure, warrant, audit, fix). Consider using limiting liability language in your engagement letter, and discuss this language with your professional liability insurance carrier or legal advisor as appropriate.

If you would rather refer your clients to other experts, consider the following risk management tips:

* Document your referrals. Ideally you should send a letter to the client; you may want to use Exhibit 2 as a guide.

* Refer no less than two to three names. Note: It is imperative to have some sense of the competency of your references.

* Clearly state that it is the client's responsibility to exercise due diligence in assessing whether the referrals will fit the specific needs and requirements of the situation.

January 1, 2000, is fast approaching--more and more CPAs will be under pressure from clients to do something. CPAs have the opportunity to add significant value to clients but must carefully balance the risks with the rewards. Decide now what approach you will take when clients pressure you, and make sure you document, document, document! *

Suzanne M. Holl, CPA, speaks frequently on Y2K issues in her role as a loss prevention specialist for CAMICO Mutual Insurance Company in Redwood City, Calif.

Editor:
James L. Craig, Jr., CPA
The CPA Journal

The CPA Journal is broadly recognized as an outstanding, technical-refereed publication aimed at public practitioners, management, educators, and other accounting professionals. It is edited by CPAs for CPAs. Our goal is to provide CPAs and other accounting professionals with the information and news to enable them to be successful accountants, managers, and executives in today's practice environments.