Don’t Overstep Your Competency Boundaries
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Source: Accounting Today Staying within the boundaries of your expertise requires good judgment. CPAs generally know where to draw the line on legal issues, but sometimes there are gray areas. A CPA may review a legal document but should not draft one. The tax code and ERISA are legal areas, but CPAs regularly interpret and give advice with respect to them. When CPAs serve as investment advisors, there is risk of going beyond the boundaries. Clients may blame their advisors when the market declines, and they may question a CPA’s objectivity on investment advice. And juries may be sympathetic to the client if the CPA received a commission on the investment. Juries may also be influenced by any lack of professional education in the investment advisory area. Obtaining professional designations and earning continuing education credits is an important defense in legal actions. CPAs often act as team leaders or quarterbacks in a financial planning engagements. In this role, the CPA may make recommendations on the credentials of other advisors or may recommend other advisors. So long as there is no referral fee, the onus is on the other professional. From Accounting Today, |