Error Omissions
Error Omissions
Submit your information below so we can contact you with a FREE quote
[All fields are required.]
Actual Annual Revenue:
Verify:
=
I have read and agreed to theTerms & Conditions
Error Omissions
Error Omissions

Accountants E&O Insurance: Minimizing the Risk of Lawsuits


Accountants E&O Insurance Minimizing the Risk of LawsuitsErrors and omissions lawsuits against accountants, CPAs, auditors, bookkeepers and related professionals typically arise out of disputes that involve mistakes or oversights on tax returns, failure to deliver on a promised service, and incomplete or incorrect work, among other oversights.  Errors & Omissions insurance, also known as Professional Liability coverage, for the accounting sector protects you and your business from bearing the full cost of defending a lawsuit and any subsequent judgment against you for either providing or failing to provide a professional service. It’s must-have insurance coverage for any professional in today’s litigious environment.

In addition to securing the appropriate coverage, implementing policies and procedures to help stem losses as much as possible is critical. Following are several ways to minimize the risk of an E&O suit:

  • Ensure you always obtain an engagement letter from a client and that the letter clearly defines the scope of the engagement. Be sure you clients sign the letter.
  • Meet a client’s deadlines. This may seem obvious, but when a client advises you of a deadline, be clear about whether you can fulfill it. Don’t assume that the client has imposed an artificial deadline. If you don’t deliver when the client expects you to, this can result in the client not paying you. It can also instigate a lawsuit alleging that failing to meet the deadline caused financial damages for the client.
  • Clearly articulate the nature of the services you are providing. Even beyond a letter of engagement, meet with the client to go over exactly what you are providing so there are no misunderstandings.
  • Ensure that your invoices are detailed. If you are billing per hour, ensure that your billings reflect the time spent for each task so if a dispute arises, you have it writing. Also, be sure you’re paid on a timely basis. Many lawsuits often arise after a client fails to pay, claiming that he or she was unsatisfied with the work, which is why payment was not rendered.
  • Avoid accepting any work outside of your expertise. For example, if you don’t regularly perform SEC audits, then this service is one in which you should not engage – until you have the expertise, that is.
  • Inform your clients of any conflicts of interest upfront. You don’t want your client to feel betrayed nor do you want increased scrutiny or the possibility of a lawsuit.

Review your E&O insurance with a professional firm dedicated in this area to make sure you have the right coverage. Coverage issues can arise involving the definition of professional services provided, the definition of damages and what is and isn’t covered, among others. Axis Insurance Services specializes in E&O and Professional Liability insurance for Accountants and can review your coverage as well as the best practices you have in place to minimize your exposures. Give us a call at (877) 787-5258.

 

Comments

comments

Blogged on: August 12, 2015 by Mike Smith
Error Omissions
Error Omissions
Submit your information below so we can contact you with a FREE quote
[All fields are required.]
Actual Annual Revenue:
Verify:
=
I have read and agreed to theTerms & Conditions
Error Omissions
Error Omissions