6 Common Questions about eSignatures
As a result of the ESIGN Act of 2000, online E-Signatures have been granted the same legal status as a written signature, so they are now the legal equivalent of hand written signatures. Eighteen years later, many of us still favor a ‘print to sign’ mode - print a document that was digitally created, read, edited and stored - simply to gather a signature. Old habits die hard! The better we understand electronic signatures, the more comfortable we’ll be in using them. Following are several key questions we are often asked about eSignatures, and some things to take into consideration when deciding to go digital.
What is eSignature?
An eSignature, or electronic signature, is an electronic method of providing agreement with the content of a document or a set of data to which the signature relates. Like handwritten – or ‘wet’ signatures created with a pen, an electronic signature is a legal concept, capturing the signatory's intent to be bound by the terms of the signed document.
The convenience of eSignature means that documents can be signed without printing, scanning or faxing. Just open the document on a PC, tablet, or mobile, review the document, and place your signature. Then, send it back via email to the sender. It is easier, faster, and less expensive than signing with a pen.
How are accounting firms using eSignature?
Electronic signature software is used for finance-related documents twice as often as in any other industry. Finance and accounting firms conduct high volumes of work requiring sign-off to move forward. Documents often require review, approval and transfer back to the appropriate person before being archived for future reference, accounting and audit purposes. A common problem occurs when paper documents sit in one department for days before moving to the next, and it can be difficult to keep track of progress.
Electronic signatures provide a simple, legally binding option to capture consent. Virtually any document requiring a signature process can benefit from the speed and traceability of eSignature, including employment contracts, NDAs, letters of consent, IRS Forms 8878 and 8879, management representation letters and engagement letters.
How can firms benefit?
ESignature software allows accountants to easily send documents for electronic signature. Using eSignature eliminates the time it takes for clients to print PDFs, sign them, and then return them by fax or mail. Documents turn around in hours instead of days. Client engagements run smoothly, contracts and agreements are confirmed quickly and securely, and taxes and other forms filed more efficiently. Accountants can focus on client work instead of on tracking documents. Another benefit is that clients have a seamless experience, and they too save time with eSignature over manual document signatures.
Is it legal?
Electronic Signature has been recognized by law in the United States since 1999, when the first states adopted the Uniform Electronic Transactions Act. The United States has a history of being a business-friendly environment.
In Canada, Electronic Signature has been recognized by law since 1999, with the passage of the Uniform Electronic Commerce Act. Canada also has a history of being an open, business-friendly, eSignature technology-neutral environment.
ESignatures, when combined with an audit trail, tamper-sealing, strong authentication and security are more enforceable than wet signature because they are viewed as containing court-admissible evidence.
Is it secure?
Security and confidentiality of client information is a top concern for accounting firms. Clients need to know that documents won’t be shared or stolen and that their signatures can’t be forged. Electronic Signature management lets accountants and clients send documents electronically, instead of leaving them sitting in the mail or on the fax machine. Secure authentication and data encryption help protect against fraud. See our recent article on Securely Sharing Client Documents.
Is it proven….and compliant with regulations?
ESignature technology was initially designed in the 1970s, and has been in commercial use for over 15 years. Docusign, a leading eSignature provider, meets the latest IRS regulations, ISO 27001 and SSAE 16 standards, as well as others. Read about Electronic Signature Guidance for Forms 8878 and 8879 on the IRS site.
Tips for selecting an eSignature solution