Accounting may seem like a steady job with little to no issues when it comes to the predictability of its industry. Great pay, great benefits and long-term job security attract many future employees coming out of college or those looking for a more stable career. However, like any industry and any career, there are risks that can apply, bringing to light certain liabilities that show up.
Whether it’s malpractice or negligence, there are different ways that a CPA or auditor can experience a legal setback to their career and long-term plans. Fortunately there’s dependable coverage to protect against risks including malpractice insurance for accountants and there’s plenty of education behind preparing yourself for possible liabilities. Stay a stay ahead and avoid these risks.
Accounting Today Research sampled some CPA firms to see what some of the most common claims against are and malpractice came in ahead of the pack. This can show up in terms of negligence and misrepresentation. The former relates to when an accountant fails to us the skill, learning and care usually used by accountants to finish their services. The latter relates to an accountant essentially covering up wrongdoing done while offering service or misrepresenting exactly what they’re offering their clients.
So much of our news is filled with the latest vulnerabilities in data for companies and individuals. From data breaches to software hygiene risks to lost or stolen devices, it’s important to keep all your information safe. As a CPA, it’s even more important to keep your clients’ sensitive information as secure as possible and you can do this by investing in encrypted cloud storage services.
CPA’s are often hired as auditors for their clients, but this could open them up to face claims of fraud. How? By failing to catch bookkeeping inconsistencies that show possible employee theft. Accountants can avoid this by being more diligent with assessing their quality control and risk management procedures.
Mergers and acquisitions have become more standard operating procedure for CPA firms since the recession. While more efficient in terms of productivity, mergers can present issues when it comes to high exposure. When one company merges with another company, they run the risk of not understanding the full picture of who they’ve bought out.
Accounting professionals will be given the task of transferring a large amount of funds from one generation to the next as Baby Boomers enter their twilight years. CPA’s should be aware of the best ways to transfer wealth while keeping tax liability to a minimum.
Partnerships can be very common for CPA’s in terms of exposure and risk. Liabilities in partnerships happen when an accounting firm is supporting a business partnership with their services and the issue turns to seeking additional financing. Claims against accountants in this area have pointed to the CPA giving more favor to one client over the other.