When a client asks a CPA to "confirm source of funds": Define what the letter actually does

Usman Khalil, RCIC, CPA, is a licensed and regulated Canadian immigration consultant, and founder of MAK Canadian Immigration Services in Mississauga, Ontario.

"Can you just put this on your letterhead and confirm where the money came from?"

For a chartered professional accountant, that seemingly simple request should trigger more questions than drafting.

The client may need the letter for a lender, investor, lawyer, regulator, immigration process, business transaction, or another professional. One reader may treat "confirm" as a factual summary. Another may hear assurance. A third may assume the CPA traced every dollar back to its economic origin and reached conclusions about ownership, legality, tax treatment, or whether the funds are acceptable for the reader's purpose.

Those are not the same assignment.

In work that crosses accounting and immigration, I have found that the greatest risk is often not a bad calculation. It is a good calculation wrapped in language that suggests the CPA did more than the engagement actually required.

A short letter can travel much farther than the file that produced it. Once it is forwarded outside the original context, the title, verbs, and omissions may be the only clues a third party has about what the CPA examined and what the signature means.

That is why the first professional task is not writing the letter. It is defining the job.

Start with the question the reader is trying to answer

Before drafting, ask three things: Why is the letter needed? Who will rely on it? What exact question is that reader trying to answer?

A bank asking for the origin of a down payment is not necessarily asking the same question as counsel seeking a schedule of asset-sale proceeds. A business investor reviewing capital history may have different concerns from an immigration decision-maker reviewing whether a financial narrative is supported by records.

The purpose should be specific enough to shape the work. If the assignment is to reconcile proceeds from a property sale, relevant evidence may include ownership records, the sale agreement, closing documents, bank deposits, and subsequent transfers. If the assignment concerns accumulated business earnings, the trail may involve corporate financial statements, tax records, dividend documentation, shareholder accounts, and banking records.

The point is not to collect everything the client owns. It is to identify the evidence that answers the defined question and to make that scope visible to the reader.

Do not let the requested letter define the engagement

Clients often arrive with the output already in mind: "I need a source-of-funds letter." That label does not tell the CPA what professional service is being requested.

The engagement has to be defined by the work, applicable professional standards, and the purpose, not by the client's preferred wording. Depending on the circumstances, a CPA may be performing a reconciliation, preparing a schedule, carrying out specified procedures, or providing another professional service. Those are not interchangeable merely because the final communication fits on one page.

CPA Ontario's Code of Professional Conduct provides a useful discipline through its fundamental principles of professional behaviour, integrity and due care, objectivity, professional competence, and confidentiality. The practical question before signing is straightforward: What records did I examine? What period did they cover? What calculations or reconciliations did I perform? What information came directly from the client? What did I not test? What could a reasonable third-party reader think I am vouching for?

The CPA's signature should not be allowed to do more work than the engagement.

Separate documentary facts from the client's story

Consider a client who says a large deposit came from the sale of personally owned property.

The records may support several distinct facts: the client was registered as an owner; a sale agreement was executed; closing documents identify proceeds; a bank account received a deposit; and part of that money later moved to another account. Those facts can be traced and described.

A broader statement that "all of the client's wealth was accumulated lawfully over many years" may go far beyond those records. So may descriptions such as "legitimate," "clean," "unencumbered," or "fully verified." Those words can carry legal, regulatory, anti-money-laundering, tax, ownership, or assurance implications that the engagement may not have addressed.

A useful letter makes the boundary visible. It tells the reader what the records support and, where material, what came from client representation rather than independent or third-party evidence.

That is not weaker drafting. It is stronger professional communication.

Use verbs that describe the work, not the desired impression

Words such as "verified," "certified," "confirmed," and "validated" are attractive because they sound decisive. They can also be dangerously imprecise.

If the CPA reviewed specified records and reconciled amounts between them, say that. If a schedule agrees to records supplied for the engagement, say that. If the CPA performed particular procedures and is reporting the resulting findings, the communication should make those procedures understandable.

The reader should not have to guess what sits behind the verb.

A broad statement that the CPA "verified the source of all funds" can imply much more than a review of selected records. The same problem arises when a letter reads like an assurance conclusion even though no assurance engagement was performed.

The strongest wording is not the wording that sounds most conclusive. It is the wording that most accurately matches the work.

Make limitations useful, not defensive

Limitations matter when they prevent a reasonable reader from drawing the wrong conclusion. They should not become a wall of boilerplate that makes the letter unusable.

A well-scoped communication may need to state that it is based on specified records, covers a defined period, relies on certain client representations, or does not address matters outside the engagement. If the work did not establish beneficial ownership, tax compliance, legal entitlement, or acceptability of the funds for the third party's decision, the wording should not imply that it did.

This matters because letters are frequently reused. A document prepared for one lender, transaction, or application may later be forwarded elsewhere. Clear purpose and scope language makes the communication more durable because the next reader can see what the CPA did and did not conclude.

Keep accounting conclusions separate from regulated immigration advice

When the letter will be used in a Canadian immigration matter, another boundary appears.

The current public guidance of Immigration, Refugees and Citizenship Canada (IRCC) says paid immigration and citizenship representatives must be authorized. Immigration and citizenship consultants must be members in good standing of the College of Immigration and Citizenship Consultants, while eligible lawyers, paralegals, and Quebec notaries are regulated by their respective professional bodies.

That does not prevent a CPA from performing accounting or financial work that later becomes evidence in an immigration file. It does mean a CPA who is not separately authorized should avoid turning the accounting engagement into paid advice about whether the client meets immigration requirements or how the application should be argued legally.

The accounting contribution can still be significant: organize and reconcile financial evidence, identify inconsistencies, describe the procedures accurately, and stay inside the engagement and the CPA's competence. Where another regulated professional relies on that work, each professional remains responsible for their own scope.

Preserve the basis for every material statement

A signed letter should be reproducible from the engagement file.

If another professional in the firm asks six months later why a statement was made, the answer should not depend on the preparer's memory. The file should connect material statements in the letter to the records, calculations, representations, and procedures that support them.

That may include the client's request, the intended-use discussion, documents examined, schedules prepared, reconciliations performed, material representations, limitations identified, and the final communication.

This is not file-building for its own sake. It is about preserving the logic behind a professional assertion.

Before signing, ask five questions

A short final review can expose most of the ambiguity:

1. What exact question is the intended reader trying to answer?
2. What records and procedures support each material statement?
3. Which statements come from the client rather than independent or third-party records?
4. Could any wording be read as assurance, legal advice, ownership confirmation, or another conclusion the engagement did not provide?
5. Could another competent professional reconstruct the basis for the letter from the file?

If those questions have clear answers, the letter is much less likely to carry more meaning than the work supports.

Clients may ask for the strongest possible wording because the letter matters to a transaction or application. The CPA's objective is different. The job is to make the communication accurate, understandable, and defensible.

A useful source-of-funds letter should let a third-party reader answer three questions without calling the preparer: What did the CPA look at? What did the CPA actually do? What, exactly, is the CPA saying?

When those answers are clear, the letter can carry professional weight without carrying more meaning than the engagement.

Editorial Sources
CPA Ontario, CPA Code of Professional Conduct and Student Code.
CPA Canada, A Framework for the Decision Maker, including agreed-upon procedures and assurance engagement distinctions.
Immigration, Refugees and Citizenship Canada, Learn about representatives.
Immigration, Refugees and Citizenship Canada, Find out if your representative is authorized.

Usman Khalil, RCIC, CPA, is a licensed and regulated Canadian immigration consultant, and founder of MAK Canadian Immigration Services in Mississauga, Ontario. Title image: RDNE Stock project (Pexels.com).