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Errors and Omisssions LiabilityAccountantsWhy buy Accountants Professional Liability Insurance? Accountants have liabilities not only to their clients but also to third parties who may rely on the information prepared by the accounting firm. According to a recent IRS’ annual report, over 85% of the returns audited contain errors or omissions. These can range from simple mistakes, like failing to check the QTIP election box, or more complicated issues, such as misinterpreting a provision of the tax code. The complexity of our tax laws can be a pitfall for accountants who may have made every effort to file a complete, accurate and honest return. Over half of all claims made against accounting firms arise out of tax services. And another 20% of claims result from compilation, review and bookkeeping work. It pays to be prepared to defend claims against your practice – even unfounded claims are time consuming and expensive. Who should buy Accountants Professional Liability Insurance? CPA Firms Enrolled Agents Public Accountants General Accounting Firms Tax Preparations Services Bookkeepers Sole proprietors and part-time practices Financial planners Claim The client's long-time bookkeeper left the firm and a new bookkeeper was hired. The client asked the accountant to help train and supervise the new bookkeeper. During a one year period of compiling financial statements and re-organizing the records of the new bookkeeper, the client's financial position changed from an expected profit of $134,000 to an actual profit of $30,000. Additionally, it was determined that approximately $70,000 was owed in back taxes, interest and penalties. The accountant personally loaned the owner of the client company $90,000 which the accountant felt was adequate capital to bring the client back to profitability. The client company ultimately failed; the accountant obtained a judgment for re-payment of the notes. The client retaliated with a law suit alleging professional negligence. Click here to download an Accountants Professional Liability application and send your submission to PLUS today! |
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