Question

True or False: client prepared records, like the general ledger, may be retained by the CPA until fees due to the CPA are received

Answer 1

False. CPAs cannot retain client prepared records until fees are received as it goes against professional ethics and standards.

Step-by-step explanation:

False. Client prepared records, like the general ledger, cannot be retained by the CPA until fees due to the CPA are received. It is important for CPAs to maintain professional ethics and abide by established standards. According to the code of professional conduct, CPAs must return client records promptly upon request, regardless of whether fees are due.

Retaining client records until fees are received may be considered unethical and can lead to legal consequences. CPAs should prioritize client trust and confidentiality by promptly returning records when requested.

For example, if a client decides to terminate their agreement with a CPA and requests their records, the CPA must comply and return the records without delay, even if there are outstanding fees.