Accountants’ Liability—Calm Before the Storm?

Source: Accounting Today

A number of issues expected to affect accountants’ liability haven’t materialized—yet. Examples are the subprime problem, the soft economy (leading to employee theft), valuation deteriorations (leading to disappointments in divorce, for example), declining investment values, bankruptcies, terminations of loan commitments, network risks, the move to international reporting standards, etc.

Firms should make sure their coverage is adequate. For example, coverage for exposure to claims in the financial services area may be provided by endorsements to your regular policy. This may cover registered representatives in the firm, but may not cover the firm as a whole or services provided independently of your broker/dealer relationship.

Because there have been relatively few claims recently, there have been new entrants into the insurance market. Firms need to have confidence these firms will stay around when the going gets tougher.

CPA firms should not get complacent about long-time clients in an economic downturn.

For the complete article, click here and select the article "Liability Insurance: Buy Before it Rains" in the July 21, 2008, issue.

From Accounting Today, July 21, 2008, SourceMedia Inc., One State Street Plaza, 27th Floor, New York, NY 10004, 800-221-1809.

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