Accountants and bookkeepers should periodically take time to review their policies and procedures and to assess risks to the firm. There are many scenarios that present a risk to your business, but luckily there are ways to mitigate them. In addition to obtaining comprehensive liability insurance policy for bookkeepers, consider the following common risks in your sector and assess how your firm would be prepared should they arise.
Cybercriminals are becoming more sophisticated about their scams. One common scam is a fictitious email including a link that, when clicked, can download and install malware onto the computer. Another common scheme is an email appearing to be from a client asking for a special payment request, such as a wire transfer to a new account. The request usually comes with a tight deadline and the perpetrator may indicate they are unreachable to confirm, for reasons such as traveling.
When seeking to provide good service, one may go ahead and execute the request, then comes to find that it wasn’t really the client that made the request. By the time the scam is discovered, the client’s funds can’t be recovered.
Take extra measures to verify that any unusual requests are coming from an actual client, especially any that indicate a change to banking information. If there is any suspicious activity, always all your client. They will appreciate this extra security measure as you’re helping to protect their money.
A common misconception is that only businesses in the technology or cyber security sector need to worry about their cyber risks. This is not true. If you work with technology at all in your line of business (which is virtually every business these days), you are exposed to potential cyber attacks and data breaches. Cyber Liability Insurance is a key line of defense against these rapidly growing threats.
Changing Professional Standards
Many changes are on the horizon because of tax reform regarding audit procedures and accounting for leases and revenue recognition. Help clients prepare for major changes and communicate how these changes may impact them to avoid liability claims from failing to advise them. Inform clients of relevant changes in tax laws and regulations through a client mailing or newsletter, and make it clear that the client is accountable and should contact you to see how the changes affect their specific situation.
Increasingly, accountants are being asked to serve as a trustee for clients. Before offering trustee services, consider the risks and have sufficient knowledge and experience to deliver. As a trustee, you can encounter assets that are difficult to value or manage and even feuding beneficiaries.
You may think it’s an honor to be asked by a longtime client, but it’s the beneficiaries that are going to be fighting over the trust assets. Without proper experience in trustee services, be conscious of offering the services.
Focus on audit quality and continual improvement, learning from the findings of the inspection. Think of the findings as opportunities to be better and introduce new processes or modify existing ones in response.
Consider using data analytics to analyze large amounts of data instead of statistical sampling, which is helping to improve audit quality.
Mitigate risks through an engagement letter. This will make defending a claim much easier. Disputes over the scope of services or a client’s lack of understanding regarding the limitation of the service are frequent issues.
An engagement letter is a tool to help manage expectations. Help prevent claims with better communication about expectations.
About Bozzuto & Co. Insurance Services, Inc.
Bozzuto & Company Insurance Services has provided business and personal insurance solutions to clients throughout California since its founding in 1981. Our experienced staff understands the unique needs that each person has when insuring their lives and their businesses, and we pride ourselves on our deeply personal customer service. We are happy to help you through every step of the insurance selection process. Contact us today at (800) 400-6394 to learn more about what we can do for you.