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Posted on: April 9, 2020 by Huntersure
Even though this year’s tax season deadline has been pushed back until July due to the coronavirus, accounting professionals are hard at work with their clients’ tax and financial information. This extra time is great for accountants to get caught up on their work while preparing for a shortened tax season next year. The change we’re all seeing in our personal and professional lives in general may see some mistakes made, but when it comes to accounting practices, accountants are not off the hook from malpractice lawsuits.
Your accounting clients need to be made aware of what could empower a client of theirs to bring a malpractice lawsuit against them. By offering these tips, accounting professionals can limit the risk of the fallout that comes with a malpractice lawsuit.
While taking on new work is never a bad thing, being diligent in knowing who that potential client is and what risks they can present is more important. Accountants should do this for all new clients as well as current clients. By digging through references or online searches, accountants can get an idea of what kind of client they may be working with. Accountants can learn about litigation by or against a client, which provides insights into their past.
This is a little bit easier said than done, but it is a must. When an accountant is sued, they will face a number of questions around what they knew or were aware of. An accountant should have an understanding of what their client does professionally and what they may be facing when it comes to running their taxes.
Accountants should be operating with the right level of accounting insurance in order to avoid major financial issues of their own. Accounting insurance can help to provide the right resources when going through litigation or a court appearance. Having this coverage provides peace of mind and will help to protect an accountant client’s reputation. Accounting insurance brokers should be sure to convey the importance of this kind of coverage, especially in a time of some confusion.
Some CPA’s are owed major fees when they are sued by their own clients. Accountants should be diligent about receiving the funds they are required in order to do their job. When an accountant has to demand payment at any point, clients often come up with various reasons to not pay and/or sue the CPA. The struggle to retrieve payment can be a major hassle as it is time-consuming. CPA’s should be sure to be paid in full before or at the presentation of a new client’s finished taxes.
Putting oneself in an ethical dilemma is not going to benefit anyone. Many lawsuits are successful in cases where a CPA performing a fraud examination also performs attest services. Or when a CPA providing merger and acquisition services also performs nonattest services. The facts of each case will dictate where the lines are crossed. Accountants should remember that juries are usually more sympathetic to the plaintiff in cases where there is a conflict of interest.
Huntersure LLC is a full-service Managing General Agency that has provided insurance program administration for professional liability products to our partners across the United States since 2007. We specialize in providing insurance solutions for businesses of all sizes. Our program features can cover small firms (grossing $2.5 million annually) to large corporations (grossing $25 million annually or more). We make doing business with us easy with our breadth and depth of knowledge of E&O insurance, our proprietary underwriting system that allows for responsive quoting, binding and policy issuance and tailored products to meet the needs of your insureds. Give us a call at (855) 585-6255 to learn more.
Posted in: Accounting