Working With Contractors: Constructive Advice on Limiting Liability

Source: CPA Journal

According to this article, the most common claims against CPAs who provide services to contractors involve:

• The use of estimates,
• Reclassification of independent contractors,
• Sureties, banks, or other third-party financial statement users,
• Internal control weaknesses, and
• Management fraud.

The author discusses techniques for preventing losses in each of these areas, including careful documentation of the CPA's responsibility (or lack thereof) in engagement letters, restricting distribution of financial statements without the CPA's written permission, suggesting a forensic audit (and documenting the client's response), and screening potential clients.

For the complete article, click here and select the article “Liability Exposures in Providing Accounting Services to Contractors” in the October 2009 issue.

From The CPA Journal, A Publication of the New York State Society of CPAs, October 2009.