| Source: Partner Advisory Advantage
A report by CAMICO Mutual Insurance Company says more than half of claims against CPAs are from tax engagements.
Here is some advice on controlling risk:
- Evaluate engagements to make sure they do not escalate into something for which the firm does not have the experience or competency to handle.
- Avoid high-risk clients. Order credit reports, review prior financials and management letters, and talk to the client’s personnel, bankers, lawyers, and prior accountants.
- S Corp elections are based on future assumptions. Clients should be informed that future events may affect the benefits of the election. Avoid the perception that the decision was made by the CPA. Document the consultation with the client on the S Corp election, and have the client acknowledge it in writing.
- In Estate Planning, heirs can be unhappy with the estate planning decisions, and the client is not available for a deposition. Therefore, the positive and negative elements of all estate planning options should be in writing and acknowledged. The CPA must be competent in this area and must have documentation regarding reliance on attorneys and other professionals who participated in the plan.
From Partner Advantage Advisory, January 2006, p. 1. Hudson Sawyer Professional Services Marketing Inc. www.hudsonsawyer.com. For the complete article, click here. Subscription $279 per year; single issues—$25. Orders 800-945-6462. |
