The services provided by accountants can be a source of woe or great joy. There are few things people like more than getting a tax refund, or get equally discouraged over having to pay additional money to the IRS and state board. Providing tax advice can lead to claims against accountants for errors or omissions committed when filing returns. This can cause serious problems for a CPA who doesn’t have proper insurance for accountants that addresses such concerns.
Tax preparation is the bulk of an accountants’ practice and because they produce such a large amount of tax returns during March and April their work can be subject to intense scrutiny by the Internal Revenue Service (IRS). These few weeks can be very taxing to CPAs because they can wind up deluged with more work than they can possibly handle. This can result in tremendous pressure to get things done by the deadline and is the reason why mistakes may occur when it comes to preparing so many documents in a short space of time.
Malpractice claims occur routinely
Whether you miss a deadline, or end up giving out poor advice, you can find yourself facing a malpractice suit. Still, the vast majority of claims stem from errors made on returns filed. This can be due to exhaustion, inattentiveness or in many cases poor communication with the client. Administering more and better quality control procedures could possibly prevent these types of mistakes from occurring with such frequency.
CPAs have an obligation to exercise professional care when it comes to working in this field. By failing to perform as stated in any agreement set forth in contracts they can face serious risks and exposures. You don’t want to do or say something that could be considered a breach of contract.
When defending your actions against a breach of contract you will need to provide evidence that the client’s loss occurred because of factors other than negligence. A show of substantial proof that negligence was not a factor means that the client may be at fault due to contributory negligence, which eliminates liability on the part of the auditor.
Always be thorough and check all of your work prior to submitting completed tax documents. Having insurance for accountants will provide you with the necessary assistance when negligence or malpractice does occur.