“Practicing professionals have a 15 to 25 percent chance of being sued during the course of their career, ” says Wilhelm Dingler, an attorney in the professional liability department of Marshall, Dennehey, Warner, Coleman & Goggin in Philadelphia.
And mostly for the same reasons, year in and year out:
- Bookkeeping services and suggesting procedures for bookkeeping to clients. If embezzlement occurs, you are blamed.
- Significant personal contact with a client and the performance of audit functions. Lack of objectivity can be claimed.
- No engagement letter. An unclear “he said/she said” situation arises.
- Lack of clarity regarding the work to be performed (a corollary to the above). Gives rise to client expectations that differ from yours.
- Tax advice beyond area of expertise. Penalties and disallowance of structures may follow.
- Involvement with boards or having ownership interests in an entity. Claims can arise of insider dealing and lack of objective accounting practices.
- No internal procedures for follow-up. Deadlines are important, and “to do’s” can fall through the cracks.
- Advising more than one party to a transaction without significant disclosures and waivers.
- Lack of disclaimers in prepared financial statements delineating their purpose and use.
- Failure to keep current in education and training.
PS: This list is unchanged from the 1990’s. Kind of sad, isn’t it?
Source: Pennsylvania CPA Journal
