I’m curious how others approach it if a client catches an error on their returns.
In this case I didn’t notice one of the documents they sent had multiple pages and I left a slip off their return, which happened to be a decent deduction. In the past I’ve been aggressive at discounting if a error ever occurs. Typically either disregard the invoice completely or discount by 50%.
My error rate has historically been low (I review each return on a separate day) so I haven’t worried about it too much but this year has been gruelling so I’m not as shocked it occurred.
I knew a tax partner with KPMG back in the 90’s. He was talking one day about an error that happened in one of the engagements they were working on. I learned a good lesson from his handling of the error. He told the client that as much as we take care and try to be perfect, sometimes errors happen. We all make mistakes. You can’t beat yourself up. Try to learn to take more care in looking through info but you’ll never be perfect. Don’t let your clients hold you to that level, either. I also worked with an older partner early in my career. Some error happened on the financial statements of a doctor client. The doctor client wouldn’t let it go and kept going at the partner. Finally, the partner told him that at least when we make a mistake, we fix it. We don’t bury our mistakes.
I think good is better than perfect. Trying to be perfect sounds good, but it often causes bigger problems. Some people check everything three times just to avoid small mistakes — but then they miss deadlines or make bigger mistakes.
It’s better to do a good job and keep moving, instead of getting stuck trying to make everything perfect.
When I was a student, a retired partner once told me that bad work never caused him any trouble, but bad clients always did.
I probably have about a 5 to 10% error rate that means an adjustment is required afterwards. Sometimes it’s my fault (I missed something they gave me), sometimes it’s the clients fault (they didn’t give me something) or sometimes it’s the CRA’s fault (they assessed it wrong and I have to argue with them to get it back to the way I originally filed it). Some years are better than others but this year is going to be interesting… Most of my clients are very forgiving and those that aren’t - like Kevin’s doctor - get told to go away.
This year? There will be a tonne of “mistakes”, mostly due to CRA/AFR issues.
Previously, I’d evaluate the situation…if it was more the client than me, I’d usually fix, with either a fee attached or a comment. If it’s my error, I fix it and pay any penalty/interest.
This happened to me once (that I know of). Luckily it was just RRSP slips so I made the adjustment no charge. Since then I make a point to look at the page count of everything sent to me and if it’s more than 1 document in the file, I actually put the page count in the title of the file.
If it’s my fault then the fix is free, but I don’t discount the invoice or ignore it (ever!). If it’s the clients fault then in general they pay to fix it*, and if it’s CRAs fault then it’s negotiated with the client.
*We bumped everyone’s invoices $50 a number of years ago and put in a ‘one free adjustment’ policy in exchange. It rarely gets used… but this year it might with all of CRA’s shenanigans.
@jglass does this include late RRSP slips? Typically this is the most common adjustment for me. But if I start charging for those then the March clients will start holding off until April and I am trying to encourage more clients to come early. So I suppose it’s the cost of trying to manage my workload.
I do “chase” slips a lot with my clients (even in prior years) and I wish I could charge for that!
Yes, it includes late RRSPs, or any other slip based adjustment. If it takes more than an hour or so then we discuss it with the client (like if they “forgot” they had a business or rental).
The ‘one free adjustment’ encourages clients to bring everything they have in as soon as it’s reasonably complete. We will hold obviously incomplete returns for a week if it’s early in the season but otherwise we process what we have as it comes and then adjust after the season is over if we need to.
We require CRA level 2 authorization for every client, and normally AFR means we don’t miss much that is slip based. Out of 300+ returns per year we do maybe 5-10 adjustments most years (I expect more this year!) but since my original invoices to every client is that bit higher it all works out. And it’s much less stressful for the clients and the staff!