1. Engagement Letters: More Communication, Less Liability Presented by: Gary H. Barnes, Esq. Gary H. Barnes Professional Association Burlington, Vermont –Venice, Florida Copyright 2011, Gary H. Barnes PA. All Rights Reserved. 802-557-0377 941-2759967 ghb@ghbpa.com

2. Introduction Why Accountants Should Lose Sleep At Night –Public Perception –Juror Perception –Plaintiff Lawyers Perception –Accountant As Defendant Still Standing

3. TRUE OR FALSE In a recent survey, more than half of those polled said they believe accountants “often” manipulate numbers to say what their clients want.

4. The Big Problem What was the accountant supposed to do? Write-ups: the most dangerous engagements The problem with judicial truth: Who is telling the truth?

5. Communicate Better: Clients Importance of better communications communications Consider the audienceaudience – Direct Talk With Client – Letter To Client – Engagement Letter

6. Clients/Audience (continued) Management Representation Letter Enclosure Letter for Attest Report Enclosure Letter for Tax Return

7. Impediments to communication Why don’t accountants communicate better? –“numbers people” vs. “words people”? –Dislike of confrontation? –Fear of Losing Client? –Fear of Saying the wrong thing?

8. Communication Habits Active Listening CYA Correspondence

9. Drafting Opportunities-Engagement Letter Drafting opportunities – Scope of workwork – Willingness to do more for a fee – Client responsibilitiesresponsibilities – Client truthfulness clause

10. More Opportunities-Engagement Letter Willingness To Modify Engagement Letter Fiduciary Disclaimer Clause Economic Loss Rule Integration Clause Limitation Of Liability Clause Third-party Liability Clause Dispute Resolution Clause

11. True or False? It is unethical to include in an Engagement Letter an agreement to arbitrate instead of going to court for claimed malpractice?

12. Other Drafting Opportunities Enclosure Letters –Limited Scope of work –Client responsibilities vs. Accountant Scope of Work –Client Truthfulness –Client Duty To Review –Not For Non-Client Use

13. Communicate Better: Third Parties Buyers of a business Third party lenders

14. Drafting opportunities Known Users – engagement letter should require third party agreement – Third party agreement should describe limitations of accountant’s engagement

15. True or False? Accountants are always bound by the terms of loan agreements, that call for an accountant to take responsibility for periodic testing of collateral sufficiency.

16. Drafting Opportunities for Known Users (continued) describe lender responsibilities describe management responsibilities secure lender’s guaranty of managements obligations dispute resolution clause

17. Drafting Opportunities -Unknown Users language tying user to engagement letterlanguage language requiring accountant consent language explaining materiality

18. What’s Next How to implement what you learned today. In House Training-Active Listening and CYA Letters Standardization: Form Letters –Engagement Letter –Enclosure Letters –Management Representation Letters Adopt Multiple Point of Contact Rule

19. Questions?

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