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A recent trend, has been for Financial Institutions to request, from accountants, for verification of client's self-employed status.

Attorney Ralph Picardi has provided potential sample wording for response to such inquiries, but recommend that you read the following thoroughly before responding to such inquiries.

Example Response to Lender's Request

Ralph G. Picardi, Esq, CPA

Lapping & Picardi

Ralph Picardi concentrates primarily in the area of defending accountants, lawyers, insurance agents and other professionals in matters of professional liability.  He further specializes in advising in matters of coverage, and loss control through hotlines, seminars, risk management audits and publications.   

The above example wording would be a perfectly appropriate limited response to a lender or broker’s request for credit-worthiness information.  However, the most protective thing for the accountant to do, especially in a state like California (with very restrictive law on the ability of third parties to sue accountants), would be to decline to respond to the lender’s request.  In California, unless the third party can demonstrate that there is close and direct contact between itself and the accountant, it will be difficult to establish the requisite standing to bring a lawsuit alleging detrimental reliance on the accountant’s work product or representations.  By responding to the lender or broker’s request for a credit worthiness letter, the accountant would be helping the lender build its case for close and direct contact.  So, unless this is a client that the accountant does not want to lose, and would lose if the accountant didn’t provide the requested response, we advise against responding to the request, and advise the accountant to direct the lender or broker to the client for the needed information.