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Posted on: March 9, 2022 by Huntersure
Accountants may spend all day crunching numbers, but those numbers often hold great significance. One mistake could be a major misstep, and accuracy is imperative. Of course, every accountant is invested in avoiding accountant malpractice, so professionals in the field are typically known to be thorough. Still, there are certain liabilities that accountants must be vigilant to avoid. According to Stanford University’s Cornerstone Research initiative, settlements for accounting lawsuits totaled over $3.5 billion in one year alone. Accusations of malpractice can be avoided by maintaining the following four principles.
In the world of accounting, it’s undoubtedly risky to work with questionable clients. Anybody who’s currently involved in litigation, high-risk business ventures, or has a criminal background would qualify as questionable. How can an accountant weed out such people, though, and ensure that they can trust their clients? It will pay off to do a little bit of research on prospective clients before agreeing to offer accounting services. Take the time to do a quick Google search or even invest in a background check.
Once an accountant has addressed the accountant professional liability associated with a questionable client, they should be sure that their business is legitimate, too. Accountants might become involved with a client who maintains a professional disposition but requests services that aren’t above board. To avoid this, professionals must always be sure that they thoroughly understand every aspect of their client’s business — the revenue streams, the taxes, the deductions, and the payroll. Knowing this information can mitigate any potential misunderstandings.
Unfortunately, conflict can arise between accountants and clients when the matter of payment comes up. An accountant may make the mistake of completing work and only submitting invoices intermittently. This might seem convenient, but it leaves the door open for nonpayment by the client — and this leaves the door open for a lawsuit. A client who doesn’t want to pay their bill may find a reason to file suit, alleging some malpractice or accountant professional liability. Accountants must always request regular payment in order to prevent such a scenario from arising.
Professional ethics are an important part of any industry, but they’re particularly vital to the field of accounting. Accountants should vigilantly avoid any conflicts of interest or appearances of impropriety. Failure to do so can easily lead to an accountant malpractice suit. Examples of such mistakes include providing both fraud examination and attestation services to clients. Because these services represent opposing interests, an account should choose just one to provide their clients. Similarly, an accountant may have an opportunity to purchase property included in a client’s estate — but this would violate several ethical standards.
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