Accounting firms are held to very high standards by their clients. No one tolerates mistakes of any kind because they can lead to penalties, back taxes, and IRS audits. So accountants must be mindful of clients who may sue for negligence or breach of fiduciary duty. As with data breach claims, consequences can be direct or indirect. The firm could be held accountable for damages as well as litigation costs. Future insurance premiums might be affected if the firm is found to be at fault.
- Be a good communicator. Be responsive to client needs, keep them apprised of progress, and immediately alert them to problems.
- Establish expectations at the very beginning of a relationship and check in regularly to make sure expectations are being met. Many clients rely on their CPA to inform them when filings are due throughout the year and missing these deadlines can lead to penalties. Unhappy or dissatisfied clients are more likely to leave, or in the worst cases, file legal actions.
- Do your homework and investigate insurance solutions designed for accountants that can pay for legal costs and losses resulting from claims of negligence or the failure to render professional services.