The ever-changing accounting, auditing, and taxation landscape can be pretty complex. Disputes may arise between chartered accountants and their clients, especially those involved in complex cross-border transactions. It is essential for chartered tax advisers or those providing accounting and auditing services to understand the various alternative dispute resolution forums available to handle disputes.
ADR can be a better option as traditional litigation techniques are time-consuming and expensive. However, accountants and clients must ensure that the entire ADR process is fair and impartial. ADR is a complicated and diverse area of the law, and accountants are advised to get legal guidance in implementing such clauses into their contracts with their clients. Let’s have a brief look into the world of alternate dispute resolution.
The two primary methods available for accountants and their customers are mediation and arbitration. These techniques come under the banner of AAA’s Accounting and Related Services Arbitration Rules and Mediation Procedures. One of the highlights of the rule is that both parties agree that the process is fair, transparent and impartial. As mentioned, this is crucial to the efficacy of the ADR process.
The wording of the ADR clause doesn’t interfere with the accountant’s ability to provide independent audits and advice. In saying that, as an accountant, you should perform your duties to the best of your abilities. ADR doesn’t absolve you of liability for a failure to adhere to relevant professional and accounting standards.
Mediation is considered the preferred form of ADR as it is nonbinding. The process involves a neutral third party that steps in to negotiate and mediate a mutually accepted resolution to a dispute. However, mediation can only work if both parties are willing to collaborate to reach a mutually acceptable conclusion.
It is important to note that mediators don’t decide disputes. They encourage both parties to reach an agreement and settle their disputes amicably. A quality mediator can gain the trust of both parties involved and settle their differences. They come with objectivity, impartiality, and the ability to convince the parties involved in the dispute
If all parties can’t reach a mutually acceptable agreement through mediation, the process moves towards binding arbitration. An arbitrator or a panel must listen to all parties and their positions regarding the matter. Even though it is pretty similar to courtroom litigation, it is more flexible and less formal. The whole process is private and confidential. An arbitrator’s decisions are not made public without the consent of all parties involved in the process. In saying that, arbitration doesn’t create a legal precedent.
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