Discussion:Banks calling to confirm self-employment

Is it OK to say I am no longer their CPA? Or is that disclosing confidential information?

Never mind.

I take this attitude toward my phone and my Email: I pay for it. I don't feel any need to fret about what a bank may want just because they ring me up on the phone.

For all you know, they could be investigating fraud against your former client because they are not required to tell you the truth at all. It could be a pretense call to gather dirt.

The bank can well afford to hire a private investigator, let them hire one.

I told her I could not confirm that I have a client with this name without permission from the taxpayer who was seeking a loan. She said "but all the accountants are giving us this information." Yeah, right!

Three weeks later, I got a faxed permission (the bank's form) with my client's signature) and a questionnaire, which wanted to know my client's occupation, employer, and how long she had been employed there. Well, she's self-employed ..that form just did not fit the situation, and wrote that in on the form.... along with my standard "I didn't audit this person's info and if you're really concerned, I suggest you do an exploration of her 1040."

Weeks later I got a call from another person at Wells Fargo, asking why I hadn't answered their query. <sigh>

I told them that I am no longer their CPA and after they asked, I told them the year of the last return that I prepared. The person said that the loan application will be sent back. After hanging up the phone, I thought that maybe I said too much.

Should I have told Wells Fargo that I cannot comment without my client's permission, even though they are no longer my client.

When does client confidentiality end?

The question I ask the third party is "how can I verify the self-employment. All I know is what the client tells me." If the client provides me with self employment income and expense that's all I know.

Send a copy of provided returns (if the client gives you permission), and that is all.

Here is the wording in one of my letters.

This letter is in response to our conversation regarding Client XXX. Please take this as notice that we have been Ms. XXX's accounting firm for the past few years and in that time have been aware of her filing her taxes as a self-employed individual during that time.

Should you have any questions regarding the foregoing, please feel free to contact me at 5XX-XXX-XXXX.

See, completely ambiguous and I believe gives myself no culpability.

The tax people and accountants won't stand up to this through their organizations. Where are their lobbyists in Washington? Banks are big enough to do their own underwriting, and they should be required to do so by law. When I say banks, I'm including the loan brokers (who get a nice fee for their work, and should be required to earn it).

This is just another case of banks wanting info from us that they can put in their loan file. Then if something goes wrong they can come after us claiming they made the loan based on info we gave them. Here's a way to mess with the bank. Email your client a blank excel spreadsheet that's set up to prepare a net worth statement (there are templates on the Microsoft Office website). The client can then fill in the blanks, sign it, and turn it in to the bank themselves.

There was an interesting event that took place last week and that was when the former CEO of Countrywide, and others, were sued in a civil suit by the SEC (I think it was SEC). Something like that.

The idea in these suits is to get these people talking, get discovery, and go after yet more people.

What I'm saying is that there are numerous civil actions being contemplated right now, and criminal investigations under way.

It would not totally surprise me if some of the accountants who innocently wrote these letters from '04 to '07 get pulled into something unpleasant (Banks/brokers claiming they relied on these letters).

With a compiled financial statement we are only stating that the numbers as presented is what the clients gave to us. To the informed, we are giving the numbers no cred whatsoever other than that they are on our letterhead.

With the self employment letter I don't state that the the client is self employed. I only state that the person is a client of mine and that they have filed a return as a self employed individual.

In my mind <don't go there Nat> the compilation and my above statement indicating the client filed as self employed could/should not bring any consequences down on me? Right?

Sometimes loans require annual financial statements (compiled, reviewed, audited) to be given to the bank. This is a regular part of most CPAs' services. I don't think that's going to go away until the entire system is overhauled, and one significant component of that is having people/businesses other than the client pay for the services.

I too was called by Wells Fargo -- but this time it was only an oral verification. I got the "official" IRS disclosure and consent form for third parties signed by client, faxed back to me and then I spoke to Wells Fargo. In this case it was an S-Corporation -- so I said, maybe the bank thinks he's self-employed but the IRS would differ -- he's sole shareholder of the corp and he gets a W-2 and distributions from his profits each year, and she thanked me.