A Hostage Crisis: Can a CPA Refuse to Give You Your Data?

What to Do About an Uncooperative CPA, Bookkeeper, or Consultant

By Gita Faust

Imagine hiring a tax preparer, a CPA, a bookkeeper, a QuickBooks consultant, a coach—somebody you decide to trust with your data—only for them to turn around and refuse to deliver anything you were promised. The unfortunate reality is that this sometimes does happen, and it sometimes even happens after you have already paid up. There is no single explanation for this, and it can happen with any kind of professional, as I mentioned before… so what can you even do when someone you hired is holding your data hostage?

First Steps

After you stop panicking and pulling your hair out in frustration, take a deep breath. If you find yourself in this situation, there are three things you should look at: the root, the past, and the agreement. • First, you need to focus on the root of the issue— a.k.a. why your CPA might be withholding your data and deliverables. You need to become a detective and identify a motive! Start by checking to make sure that you paid all bills in full and try to remember if you had any disagreements while they were working. If you cannot think of any reason, do what you can to contact them and find out! • The past encompasses their past performance and how they worked. Did you regularly communicate with them? Did they provide ongoing reports? Did they ask questions? It is a major red flag if your accounting professional does not ask questions and verify specific transactions with you—it could mean that they are not doing their work or that they are just not very professional. No matter who you hire or what they’re doing, you should repeatedly request that they update you regularly on their progress. • The agreement refers to your consultant contract, letter of engagement, or any other binding document that stipulates the do’s and don’ts of your arrangement. Read over it to check if there are any instances in which they do not have to hand over your data (hopefully, there are not!). You should have full control of your documents and software containing any data. If not, you should think twice before agreeing to the engagement!

There are sometimes very obvious causes that are overlooked in all the chaos. If all goes well, your issue should be resolved by investigating these three things. If not, well, you will have to go a few steps further.

And… Action!

So, nothing has worked. Your CPA, bookkeeper, or whoever you hired is still refusing to give you your data. If your investigation has yet to be fruitful, it is time to move into action. Three proactive steps will surely get their attention and hopefully convince them to give you what should be yours. 1. Show up. If you are the type who is not afraid of confrontation (and in situations like these, that’s important!), then you may as well find out where the CPA works. We are not advising that you go there and steal the data back, but show up early in the morning, strike up a conversation with whomever you see first (if you can identify the owner, try to talk to him or her!), and wait for your bookkeeper. This method will take more time than others, so make sure you clear your schedule. 2. Send it. Nothing is scarier than receiving a letter from somebody’s lawyer. Ask a lawyer or attorney to send the CPA a simple letter

requesting your data and documentation return. While you might not be threatening legal action, people will take your demands more seriously if it comes from a legal professional. 3. Shout out. Social media has become a very easy way for us to interact with other people in the industry, and because of this, you have a very accessible way to ask for help. Share your story on social media and request help from other professionals. Who knows? They may have been in your situation before! When you do this, be wary of tagging or mentioning the actual company causing you trouble; leaving a publicly bad review usually does not have the effect you want. However, post it where that company or CPA can see it—you want to bring your issue to their attention.

If you manage to get your data back (which you hopefully do!), keep in mind that they will likely give you the bare minimum: no calculations, no draft work papers, and nothing except for the hard data.

Lesson Learned

Situations like these are no fun for anybody. If you have ever experienced this, I am truly sorry for the stress you probably endured. If you have not, take heed and learn from those who have. Here are a few tips to prevent the loss or withholding of your data: • Maintain control: I cannot stress this enough. When drawing up a letter of engagement or any contractual agreement where somebody else will be handling your accounting data, make sure that your agreement stipulates that you own your data and can request it at any time (and that they cannot withhold it from you!). Suppose something happens, like a natural disaster, a pandemic, or something else that causes businesses to shut down overnight. In that case, you want access to the reports and documents that outline your company finances. • Create backups: This should be a no-brainer, but so many people still hand over the only copy of their data to a CPA, bookkeeper, or somebody else, trusting that they will get it back safe and sound. That is only sometimes the case. You should always keep original copies of any documents, data, or files in case of an emergency. • Get the necessary documents: You want all the important documents at your disposal once tax returns are filed. Make sure you have them! This includes depreciation schedules, amortization schedules, supporting documents, and adjusting entries for the year. • Request reports: When you hire somebody to handle your accounting data, you should request reports regularly. Many important reports spell out the performance of your business, including profit and loss by summary, by detail, by month; balance sheet by summary and by details; general ledger; expenses by vendor by summary and by detail … and the list goes on. • Check their status: An enrolled agent has to be registered with the IRS, and you can check this by following the directions on the IRS website. Similarly, you can check to ensure they have an active CPA license with either cpaverify.org or by contacting the State Board of Accountancy, where the CPA obtained his or her license. It’s as easy as that! Also, if they are labeled as a QuickBooks Advanced Certified ProAdvisor, you can look them up on Intuit’s website. If a person is registered to an organization and active, it is much easier to hold them accountable.

My team and I are heavily involved with CPAs, CFOs, bookkeepers, and consultants. In fact, we often work with CPAs, we train consultants and QuickBooks advisors, and we offer outsourced bookkeeping services. I understand how complicated and frustrating situations like these can become, but as long as you follow the tips above, you should not have anything to worry about!

If you have any questions about anything discussed above, ranging from bookkeeping services to helping you solve this very issue, do not hesitate to contact my team or me. We are always more than happy to help!

Gita Faust is the founder & CEO of HammerZen, which helps businesses save time and money by keeping track of The Home Depot purchases and efficiently importing receipts and statements into QuickBooks. National REIA members receive discounts on QuickBooks services and software. Learn more by visiting www.hammerzen. com/nreia.