The four essential models for the professional accountant-client relationship are:
i) Agency Relationship

• In this relationship, the client has most of the authority and responsibility for decision-making.
• The professional is an expert acting on behalf of a client, but under instructions from the client.
• The client knows what to do and instructs the professional to do it.

Examples:
Examples of this is the relationship between a client and an accountant

• when rendering advisory services, the accountant carries out the clients’ instructions and provides information and possibly advice, but the client makes the decisions.
• The company’s board of directors makes the decisions about what the financial statements should contain.
• Accountants operating as consultants.
• It can also exist when the accountant is not independent but is acting on the client’s instructions and on behalf of the client, e.g., an accountant who is asked to prepare a tax return for a client.

ii) Contractual Relationship

• In this relationship, the client and the professional are ‘equal’ in terms of authority and responsibility for decision-making.
• There is a contract between them, in which the client arranges for the accountant to carry out some work, and the accountant undertakes to do the work.
• This kind of relationship exists when the accountant has some expertise or technical knowledge that the client does not have, so, the client hires the accountant to provide services.

Examples:

• A firm of accountants may be engaged to provide advice to a company on the implementation of a new law or set of regulations.
• The accountant provides technical advice, and the client acts on the advice given.

iii) Paternalistic Relationship
This is a type of relationship that exists between parents (who have more knowledge and experience than their children) and their children.

• The accountant has most of the decision-making authority and responsibility; and can make decisions without the client’s knowledge or consent.
• The accountant exercises his or her judgment in what is considered to be the client’s best interests.
• Paternalistic relationships between a professional and a client can be the relationship model that causes the greatest concern because the professional will be virtually taking over the client’s affairs.

Examples:

• This type of situation may exist between a professional accountant and a client.
• The professional accountant must have experience and knowledge, and the client should be inexperienced and without much knowledge of the matters that the accountant deals with

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iv) Fiduciary Relationship

• This is a relationship between a professional and a client, in which the professional (as a fiduciary) has an obligation to act in the best interests of the client.
• The professional has superior technical knowledge and greater expertise than the client, unlike a paternalistic relationship, in a fiduciary relationship the client retains significant authority and responsibility for making decisions.
• Both parties in the relationship have responsibilities, and the judgments of both carry weight.
• The client depends on the accountants for much information and advice, but the client’s consent is needed for any decision, and in many instances, the client is involved in reaching decisions and also makes the final decision.
• For some issues, the client may recognize the technical knowledge of the accountant and allow the accountant to make the decisions.