There is no doubt that Certified Public Accountants (CPAs) in the New Jersey area may at one time or another be faced with an errors & omissions claim. Such claims are no laughing matter and in addition, if a claim arises, having insurance for NJ errors and omissions (E&O) can be quite beneficial in defense of such allegations. Here are a few select E&O tips that could quite possibly be helpful in avoiding an E&O claim.
Educating your clients can be beneficial
Clients often don’t understand their tax situations, relying on their CPA to do “whatever is needed” when the time comes. This can obviously lead to client dissatisfaction when things don’t go the way they expect them to. Accountants often use unique terminology, so it might be better to educate clients before they have an issue with the IRS or state board, rather than waiting for the fallout to happen.
By providing clients with reasons why their tax preparation is handled in a particular way will demonstrate your knowledge as well as your desire to help them to learn more about the process.
Hold discussions pertaining to E&O exposures
Office meetings are a great way to address current issues, such as changes in company policies or new state and government tax laws. Discuss areas of concern that might result in an E&O claim and ask each of your staff members what he or she thinks they could do to avoid a claim from occurring. These staff meetings present a perfect opportunity to stress key practices that are in place, such as the importance of timely documentation in filings.
The insured’s signature is an important factor in avoiding mistakes
Disputes often arise over the accuracy of the information on tax documents. What would aid in the defense of an accountant would be the presence and authenticity of the client’s signature. Once the client has signed off on their documents, generally they will be held responsible for the content.
Realize that any unsigned documents will not carry the same weight, and it is highly recommended that you never give a client blank tax papers to sign while advising them that you’ll fill it in later. This is a recipe for disaster, and a common reason for NJ errors and omissions occurring in one of the most vital industries.