Among the
biggest firms, clients will need to pay an average of $300 dollars an hour for accounting
services. For clients that have large tax returns, which are literally one and
a half feet tall when everything is printed out and stacked together, the firm
can receive into the hundreds of thousands
in revenue. Naturally, these clients
have tremendous leverage over the firm in the sense that they can easily take
their business to another firm if the previous does not meet their expectations.
This bargaining power engenders tremendous focus on positive, client relationships.
The firm will do everything they can to ensure that they maintain a healthy association
with all of their clients – especially large ones.
Michael the a tax manager for
PricewaterhouseCoopers has longer had the Walt Disney Corporation assigned to him
to ensure that their corporate tax returns are always filed on time and
accurately. Michael thoroughly enjoys working with Disney as they almost never
have any issues with how they have classified and reported their income. This proficiency
means that despite Disney’s extraordinary size, filling out the tax returns is
not overly complex. However, Michael is a diligent employee and always double
checks.
On one unfortunate day he
discovers an error – a gross error—an error of such blatant magnitude and
nature that it would have unlikely been missed by the usually meticulous Disney
tax preparers. Perplexed, Michael sends
a quick email to his contact at Disney inquiring about the discrepancy. He
receives a reply in a uncharacteristically short period of time that indicated
he should not worry about the supposed error because it is not an error due to
xyz explanation. This made Michael even more concerned. Not only would such an inquiry
much more time to investigate than Disney took to respond, very suspicious, but
also the explanation made no sense. Michael drafted another email that
explained the error and politely elaborated on the proper solution. Again,
Disney responded quickly and tersely. They adamantly reaffirmed their position
and offered no further explanation. Michael knew he would need more authority in
his next correspondence. He called an IRS hotline, available exclusively to the
top accounting firms, received congruent advice. He the drafted the following
email:
Dear Sarah:
Thank you very much for your
prompt correspondence over the last few weeks. I am again writing regarding the
allocation of income discussed in previous emails. I apologize for any annoyance
caused by my persistence on this matter. I assure you my sole concern is to ensure
that Disney avoids any penalties associated with inaccurate filling.
Regarding, the allocation of interest
income generated by off-shore, related entities – specifically those related to
Disney Cruise Lines must be reported as ordinary income. The internal revenue
code very clearly states that all revenues received for engaging in the normal
course of business must be classified as ordinary income not income received
from capital gains despite the fact that Disney Cruise Lines is a capital
investment that exists independent of The Disney Corporation. Furthermore, I
called the IRS to receive further clarification about the proper allocation of
this income and they confirmed the above opinion.
We cannot sign the return until
the income has been reclassified. We are very grateful for your understanding
and again apologize for any inconvenience caused.
Sincerely,
Michael
the Manager
The above situation was handled
well because Michael remained polite and unassuming. Though it seemed very
suspicious that such a big firm that is usually very familiar with the tax code
should make such an egregious error and not fix it, Michael did not make an
assumptions or accusations.
Instead, he calmly investigated the matter and
presented his case to the extent that either Disney would have to file a return
without PwC and likely receive a penalty, or they could change the way they
classified their income. Respectful style and appropriate delivery are paramount.
Do you feel like the conversation or means for persuasion would differ according to the client? What would you say would be some of the non-verbal delivery and style elements to accounting?
ReplyDeleteI just read another post that also demonstrates the critical nature of being objective in speech and avoiding any level of accusation. IT is important to give others the benefit of the doubt when business and work ethics is involved while still finding a way to get to the bottom of the situation. I can't help but wonder how the conversation would differ in person. In some ways I feel as though emails and written communication is more appropriate for negative information (such as this) because one allows the other to receive the information in the comfort of his/her own circumstances while not having to speak directly with someone.
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