More collaboration needed between legal and accounting firms.

Too many rnlegal agreements are being drafted with nominal tax planning. Conversely, it is common to prepare financial documents without concern for legal situations like contingency requirements, breaching of loan agreements, up-to-date minute book documentation, and rnnumerous compliance issues such as corporate statutes and industry third rnparty regulations. This Common Omission Could BiternCorporate minute books are among the first documents tax auditors ask for to rnvalidate the validity of specific tax deductions rnlike bonuses. Considering that minute books tend to be at the lawyers office, one hopes there are no misplaced rndocuments or other obvious omissions. Issues that Beg Collaboration rnI have never seen it anything but worthwhile for the rnattorneys and accountants to share some of each other's understanding of the rnbusiness.There are many reasons why. It is the responsibility of the rncompany owners to create the collaborative culture. One instance that should be looked rnat is that legal opinion is often important to confirm if rncertain accrued liabilities are really rnrequired to be paid. This would disclose some surprising rninformation. This task alone is invaluable if a shareholder wants to secure their shareholder rnloan to the company without being at the bottom of the totem pole. Small and Large Businesses Need Their Legal and Accounting Representatives to rnWork Together. rnAn important subject that begs for a lawyer and accountant to work together is rnthe typical General Security Agreements that are hanging rnover company owners. The strain these forms can generate rnregarding the legal and financial commitments of the business and its owners is more than the blood pressure of a forensics inspector hot on the trail. Realizing that there is no such thing as boilerplate agreements that can be rnchanged is great news. Considering alternatives such as letters of understanding or side rnagreements to alleviate some of the potential injury that can be caused by powerful rnGSA's is only likely to occur when the lawyers and accountants are rnworking together as they do in bigger businesses. The lawyers understand the legal problems but they typically don't run the numbers to see how easy it can be to be in technical breach of contract with the lender. rnAnd the accountants don't know the implications generously provided by legal issues. rnThis is an effective example and fascinating challenge of where your legal and accounting rnteam could gang up on your financial institution to have them realize that rntheir 'normal' provisions and covenants need to be more adaptable to the rnreality of running the business. Oh yes, the tax perspective. The fact that client privilege is only enjoyed by the legal community rnmeans that accountants tax planning memos and correspondence may possibly fall into the rnhands of CRA, but because they usually do not exist, it may not be a problem. However, if they were to exist, it might be best for your rnaccountants and lawyer to discuss ways of communicating that would offer legal privilege rnfor these phantom documents, an extreme but extremely valuable rnmanoeuvre.