Errors Requiring CPA Professional Liability Insurance
December 21, 2016
Tax time can be very taxing to certified public accountants (CPAs) because they’re often deluged with more work than they can handle. In addition to their regular clients, they are contacted by referrals as well as others needing assistance. This canunfortunately, amount to a tremendous amount of pressure to get things done by the tax deadline and this can result in mistakes when it comes to the preparation of so many documents.
Providing tax advice and preparing returns can lead to a number of claims against accountants for errors or omissions committed from those soliciting their services. This can cause serious problems for accountants whom are without cpa liability insurance. Not only is tax work usually the lions share of most accountants’ practices, but also because they produce such a large amount of tax returns annually their work is subject to intense scrutiny by the Internal Revenue Service (IRS).
Malpractice claims a common occurrence
Tax malpractice claims range from a number of things, from missed deadlines and elections, to simply giving out poor advice. But by far the vast majority stems from errors made on returns. This is due to inattentiveness, exhaustion, or perhaps poor communications with clients, more so than from errors brought on by any complexities of the tax code. This could quite possibly be prevented by simple quality control procedures.
CPAs have an obligation to their clients to exercise due professional care beginning with entering into an engagement contract. If CPAs fail to perform within the agreement set forth in the contract, this can be considered a breach of contract. CPAs may defend against a breach of contract if they can prove that the clients loss occurred because of factors other than negligence by the auditors. By showing substantial proof that this was the case, a client may then be accused of contributory negligence, eliminating any liability on the part of the auditor.
Naturally, an accountant should always be thorough and check all work prior to having their client sign tax documents for submission. Having cpa liability insurance will provide assistance when negligence or malpractice does occur. Speak to a reputable agent with any concerns or questions about this important coverage today.