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Posted on: January 17, 2019 by Huntersure
This blog was originally published on February 19, 2015. It was updated and re-published on January 17, 2019.
Accountants handle a lot of sensitive data—be it personal or financial—on any given day. While this paints a picture as to the importance of an accountant’s job, it also brings about the fact of the risks they face to be exposed to a myriad of exposures. Making an error or misjudgment could spell disaster for a CPA as mishandling a client’s assets could lead to legal charges, mounting court fees and a possible end to their career due to reputational damage.
Securing accountant liability insurance can help keep the damage of these exposures to a limited amount. But it’s even more important to be aware of the certain risks that accounts face every day and those on the rise. Being in the know will help to keep the risk of being hit with claims of fraud to a minimum. Here are a few pressing liability concerns for accounts, bookkeepers, auditors, and tax preparers.
The Affordable Care Act (ACA) is currently being put under the microscope in district courts in the United States in terms of its constitutionality, but while the health care act is still in effect it’s posing a number of potential accountant liability insurance risks. A few years ago, the ACA began to affect not only businesses, but individual tax payers as well. While clients and industry regulators expect accountants to know exactly how to handle the ACA in terms of tax preparation, analysts are still keeping an eye on liability claims.
If a tax return is filed incorrectly and a fine is needed to be paid by a client, then they can turn around and blame their tax preparer. Accountants should be aware of the political landscape of the ACA and see how it could affect their clients’ taxes.
When most people think of data security, they may think of the tech sector or financial institutions. While most data breaches happen in those areas, practically no business, or, for that matter, individual is safe. Cyber threats can be targeted at any business of any size or any person. That’s why it’s important for accountants, who handle sensitive financial information, to be aware of the rising threats of cyber security.
Cyber criminals will steal around 33 billion records of information by 2023, with nearly half of those coming from the United States alone. Accountants have unique access to clients’ information, which makes them a prime target for hackers. This is the kind of liability exposure that can bring plenty of pain to clients who see their assets harmed by outside sources. Accountants and their firms should have a risk management strategy that accounts for these issues and risks.
As another new year begins there is another boost to the influx of baby boomers settling into retirement. These boomers are expecting retirement planning and asset transferring guidance. Accountants can help these individuals with help in facilitating wealth-transfer but can also open the door to plenty of accountant liability insurance claims.
If a client who uses an accountant’s guidance in this area feels misled or that there was an error made, they can then turn around and bring claims of errors or negligence against their accountant. Financial planners and advisors could face increased exposure to liability risks as well.
At Huntersure, we specialize in providing quality professional liability solutions to accounting professionals. Our Accountant Liability Insurance program provides coverage for accountants, auditors, bookkeepers, and tax preparers, so no matter where your clients lie in the industry they can have the coverage they need to protect themselves and their assets. To learn more about our operation and our Professional Liability Insurance solutions, contact us today at (855) 585-6255.
Posted in: Accounting blog Professional Liability