subject: We Could Do With More Cooperation Between Legal And Accounting Firms Representing Mutual Clients. [print this page] Too many Too many
legal agreements are being written with nominal tax planning. Conversely, it is common to prepare financial documents without concern for legal situations like contingency requirements, breaching of loan agreements, up-to-date minute book documentation, and
numerous compliance issues including corporate statutes and industry third
party regulations.
This Frequent Mistake Could Bite
Corporate minute books are among the first documents tax auditors request to
verify the validity of certain tax deductions
like bonuses. Considering that minute books are usually at the lawyers office, one hopes there are no omitted
documents or other glaring omissions.
Items That Necessitate
Consistent Cooperation
I have never experienced it anything but worthwhile for the
attorneys and accountants to share some of each other's understanding of the
business.There are numerous reasons why. It is the responsibility of the
company owners to create the collaborative culture. One example that should be looked
at is that legal opinion may be important to verify if
certain accrued liabilities are really
mandatory to be paid. This would disclose some surprising
information. This exercise alone is invaluable if a shareholder wants to secure their shareholder
loan to the company without being at the bottom of the totem pole.
Small and Large Businesses Need Their Legal and Accounting Representatives to
Work Together.
The issue of
standard General Security Agreements is something that needs a lawyer and accountant to
work together. Legal and financial responsibilities these forms convey can be
stressfull to say the least. Realizing that there is no such thing as boilerplate agreements that can be
changed is great news. Considering options such as letters of understanding or side
agreements to mitigate some of the potential damage that can be caused by powerful
GSA's is only likely to happen when the lawyers and accountants are
working together as they do in bigger businesses. The lawyers understand the legal problems but they sometimes don't run the numbers to determine how easy it
is to be in technical infringement of contract with the lender.
And the accountants don't know the consequences generously provided by legal issues.
It is always a challenge to customize a loan
agreement with a financial institution but knowing both your accountant and attorney are helping
you "gang up" on them will give you every chance of receiving what you want.
Oh yes, the tax angle. The fact that client privilege is only enjoyed by the legal community
means that accountants tax planning memos and correspondence could fall into the
hands of CRA, but since they usually do not exist, it is
probably not a problem. However, if they were to exist, it would be best for your
accountants and lawyer to discuss ways of communicating that would provide legal privilege
for these phantom documents, an extreme but extremely valuable
