How Can CPA’s Best Prepare for Potential Risk Exposures?
With the recent increase in corporate scandals and poor business practices, CPA’s are more likely to experience legal claims than a decade ago. For example, according to CPA Mutual, a national risk retention group and accounting firm liability coverage provider, firm claims with actual expenses paid have increased by 41 percent since 1998. In order to safeguard your clients’ operations, they should maintain an Accountant Professional Liability Insurance Program. Here are some ways in which CPA’s can prepare their firms.
Senior-level staff should properly train and supervise less experienced employees. As there is a shortage of qualified candidates for these roles, it is important to determine whether or not the firm has enough man power to take on new clients, as well.
Document Retention Policies
In this digital age, document policies should include all electronic messages and data, including text messages, emails, and instant messages. Further, business laptops and phones should be included, as well, in case of an audit.
Communication and Contracts
Any written document is recoverable, regardless of its platform. Employees should be mindful of everything they write that could cause liability concerns for breaching personal and sensitive information policies. Next, the language in contracts is critical. Specialized services and niche markets need to be especially cognizant of this as this is the riskiest component for CPA’s. According to CPA Practice Advisor, firms are adding a number of specialized service niches in order to differentiate and compete, but they are not updating their letters of engagement and invoicing to clarify the exact nature of services rendered or the CPA’s role in the engagement.
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