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😱 Why does he have a pizza box on his head?

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When receiving dinosaur equipment from the client…

😱 Why does he have a pizza box on his head?

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When it hits the fan they will remind you that you are associated
If you are stressing out over this, you probably already know the right answer. It’s difficult to fire clients, but we should all do it on a regular basis. I would discuss this with your office leader and I bet they will agree if there is true risk
I guess to add to this, how risky is it to take on clients who are this financially irresponsible? What is our responsibility as CPA’s and what isn’t? And because we are essentially acting as controller, could we be sued by a third party if he defaults on the line of credit?
It is always a difficult decision but I would advice that you talk to your leadership. I would also advice you to keep documentation of your communication. Yes, you should, no matter how anyone feels. You have to do it to protect yourself.
Would say the company’s practices don’t align with your firm’s risk management policies
I agree on documentation. Although I have had plenty of meetings and calls with his about this, I’ve made sure to send a few emails reiterating my concerns with his treating the company like a personal piggy bank. I’m now drafting a formal email to fire him.
Would you explicitly state the reason you’re leaving him in writing or just leave it vague?
I always go with the “wall st journal test”. If you wouldn’t want your name associated with this practice then you have to do something about it. Sounds like you already know. Get leadership and PPD involved ASAP.
Assume the distributions violate the LOC terms? I see people do these debt financed distributions a lot - there are tax issues obviously; and the distributions don’t necessarily create income. I agree with others, document your communication
I fired this client a week or so after posting this — too many sleepless nights. We have transitioned them to a new CPA firm and they can deal with the headaches! Best decision we ever made — and we have almost brought in as much new business as we charged this one client. I do have all my emails and memos saved in case anyone asks one day but hopefully this will be someone else’s issue.