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Manage Your Risk Mondays​​

Manage Your Risk Mondays


December 26Happy Boxing Day! We hope you are able to enjoy the last few days of 2016 with rest, relaxation and time spent with friends and family. Here are a few more risk control articles to close out the year, Clients: Then End is Near and Client Termination Letters.

December 19 “It’s funny. All you have to do is say something nobody understands and they’ll do practically anything you want them to.” – J.D. Salinger.  Many CPAs may experience this response if a client requests that the firm’s indemnification of the client be addressed in the engagement letter. Not sure how to reply to your client? Learn more by reading the article How to Deal with Client Requests for Defense and Indemnification Agreements.

December 12 – According to the Charities Aid Foundation World Giving Index 2015, the United States ranks as the second most charitable country in the world. This ranking presents a great achievement for the United States. CPAs should consider the risks of providing services to not-for-profit organizations by reading the article Not-For-Profit Organizations: Charity Begins at Home.

December 5 – Tax season is just around the corner! While your desk is still clear and your mind fresh, consider taking steps now to help busy season progress more smoothly. Review the Pre-tax Season Checklist for tips on how to make tax season run more smoothly.

November 28 – Happy Cyber Monday! According to the U.S. Census Bureau Quarterly Retail E-Commerce Sales report, there were $89.454 billion e-commerce retail sales in the 4th quarter of 2015. What is the risk of a little on-line shopping at the office? Consider scenarios that may lead to a firm data breach in A Breach of Client Data: Risks to CPA Firms.

November 21 – 2015 was a challenging tax year, but those problems are now in the rear view mirror! It is time to prepare for the new issues we will face in the 2016 tax year. Join us for a webinar on December 1, 2016 from 1 – 2:15 PM EST for Are You Ready? Risk Thoughts for this Tax Season.

November 14 – The new President of the United States was elected last week. Election Day emphasizes the importance of evaluating leadership when making decisions. CPAs face similar decisions when evaluating the leadership of clients and prospective clients. Consider The Importance of Gauging a Client’s Tone at the Top.

November 7 – Do you have clients considering a move out of the country depending on the results of tomorrow’s election? If so, learn more about the risks of international taxation in The Tip of the Iceberg: Professional Liability Claims and International Taxation.

October 31– Happy Halloween! Do your clients shiver with fright at the length of your engagement letters? Consider calming their fears by implementing a standard terms and conditions document in your firm. Read more in Engagement Letter Standard Terms and Conditions to the Rescue!

October 24 – Yogi Berra likely was not talking about a CPA firm merger or acquisition when he said “We made too many wrong mistakes.” Nevertheless, managing partners may learn the hard way that this Yogi-ism applied to their merger or acquisition. Learn how you may avoid “wrong mistakes” after a CPA firm merger or acquisition by listening to Does One Plus One Equal One (Firm).

October 17 – According to the Internal Revenue Service, FBAR filings have grown on average by 17% per year from 2011 to 2015. This annual increase reflects a growing recognition of client filing obligations relating to foreign financial assets. Do these filing obligations present a professional liability risk to your firm? Learn more in The Tip of the Iceberg: Professional Liability Claims and International Taxation.

October 10 – Harry Caray once philosophized “Everything good that has happened to me has happened as a direct result of something bad.” While ending a client relationship may be “bad”, the new client that takes its place may be “good”. Is it time to evaluate your client base? Many factors to consider are discussed in Clients: The End is Near.

October 3 – Approximately 84% of 2015 failure to detect theft or fraud claims reported by AICPA Professional Liability Insurance Program policyholders involved services in which CPAs have limited or no responsibilities relating to theft or fraud detection. Do your clients expect you to detect thefts or fraud no matter the service? Learn more in Failure to Detect Theft and Fraud: It’s Not Just an Audit Issue.

September 26 – Paper cuts may be the most significant wound you can receive when preparing State And Local Tax returns (SALT). However, when confronted with a claim related to SALT services, it may that a trip to the emergency room is needed. What can you do to reduce the likelihood of these types of claims? Read Risk Management: worth its SALT

September 19 – Personal tax information, personal health information, payroll records, customer contracts, vendor contracts and so much more; the confidential information CPAs store is expansive. The continuing evolution and mobility of technology have created significant risks to data security in the CPA firm environment. Learn more in Data Security Risk: You Can Take It Anywhere.

September 12 – Approximately 50% of 2015 claims reported by AICPA Professional Liability Insurance Program policyholders did not use an engagement letter. Many defense attorneys and accounting experts indicate that an engagement letter is one of the most important tools in the defense of a professional liability claim. Need help implementing engagement letters? Get tips in Buckle Up: The Importance of Engagement Letters. And CNA Policyholders can access sample engagement letters in the Policy Holder Resource Center.

September 6 – We hope you had a relaxing Labor Day, enjoying the “unofficial end of summer” with parades and barbecues! Now that you are back at work, consider joining us for the AICPA webcast Accountants Liability – Raise Your Risk IQ (Financial Statement Services Focus) on September 20, 2016. The webcast will focus on professional liability exposures arising from the delivery of financial statement services.

August 29 – Target. Home Depot. Anthem. The IRS. The U.S. government. Numerous hospitals and universities. The commonality? All have been the victims of headline-splashing cyberattacks that led to the breach of confidential data. With so many cyberattacks in the news, many CPA firms may wonder, "Are we next?" - See more at: Controlling Your Data

August 22 – “Get your facts first, and then you can distort them as much as you please.” Unfortunately, some CPA’s perform services in accordance with Mark Twain’s humorous words. Consider risks to your firm in All in a Dishonest Day’s Work.​

August 15 – According to the Pew Research Center, 65% of American adults use social networking sites. Social media has quickly become an integral aspect in much of daily life.  However, the laws and regulations governing social media may not address the numerous issues encountered in daily usage.  In at least one area, the rules surrounding social media are becoming clearer. Read Are Social Media Posts Protected? What All Employers Need to Know About the NLRB and Social Media for more information.

August 8 – The U.S. Census Bureau’s “The Older Population: 2010” Census Brief indicated the population 65 years and over increased at a faster rate (15.1%) than the  U.S. population as a whole (9.7%). Does your client portfolio reflect this demographic shift? CPAs may be confronted with various professional liability issues associated with their aging clients. Read Considerations When Working with an Aging Client Base for more information.

August 1 – Happy National Simplify Your Life Week! Do you have clients that are making life a little too complicated? Maybe it is time to move on and make room in your practice for a better client. Terminating clients by using Client Termination Letters are an important step in ending a difficult client relationship.

July 25 – Have clients asked you to serve as a fiduciary for their trusts or estates? While less than 4% of 2015 claims reported by AICPA Professional Liability Insurance Program policyholders related to trustee and estate services, the severity is extremely high. The Unexpected Risks of Trustee Services offers risks upon which to reflect when performing such services.

July 18– Did you know there are 405,160 individuals delivering professional services as accountants, auditors or tax preparers (source: Bureau of Labor Statistics May 2015 National Industry-Specific Occupational Employment and Wage Estimates)? That is a staggeringly large number of professional peers. Professional liability risk management doesn’t just help mitigate the risk of a claim made against you, it also helps protect the integrity of the profession as a whole.

July 11– Approximately 11% of 2015 consulting claims reported by AICPA Professional Liability Insurance Program policyholders related to business valuation engagements. Claims in this specialized service can be severe. Get a better understanding of the professional liability risks when performing these services in An Art of Estimation or a Prophecy of the Future: Business Valuation & Risk Control Considerations.

July 5 – Independence Day commemorates the adoption of the Declaration of Independence. While your engagement letters will never reach that level of historical significance, they are critically important to engagement execution and management of professional liability risk. Sample engagement letters are available to AICPA Professional Liability Insurance Program policyholders in the Policyholder Resource Center.

June 27It seems that data breaches are now a common occurrence. No industry is immune from a security failure, whether it is the result of a phishing attack or a lost thumb drive. Fortunately, cyber liability insurance for CPA firms is easy to obtain. Check out the AICPA Professional Liability Insurance Program’s NetProtect® endorsement available to all sizes of CPA firms.

June 20Happy belated Father’s Day! While you recover from all the fun you had yesterday, why not earn CPE by completing the self-study, Raise Your Risk IQ, course? And CNA policyholders may be eligible for a premium credit of up to 7.5%.

June 13Smart phones, hybrid laptops, tablets, the cloud…technology is everywhere and data is becoming more portable every day. Unfortunately, portability does not permit you to escape its associated risks. Consider those exposures in, Data Security Risk: You Can Take It Anywhere.

June 6Do you count the steps you take in a day with an activity tracker and strive to reach or exceed your goal every day? Maybe you can demonstrate the same diligence in addressing quality control in your firm. Can you Walk the Quality Control Talk?

May 30 –  Do you dread completing all of those tax returns that filed for extension? Read The Early CPA Gets the Return (Done on Time) for strategies to make next year’s tax season more efficient.

May 23 –  Peanut butter and jelly; salt and pepper; Abbott and Costello; Bert and Ernie -- these are all famous pairings. Reflect on Managing Liability Risk After a Merger or Acquisition, to help your pairing achieve the same level of success.

May 16 –  10% of 2015 Audit Claims in the AICPA Professional Liability Insurance Program related to government and not-for-profit clients. Many government and not-for-profit audits will be initiated in the coming months. Before starting your next engagement, consider the Risks of Not-for-profit and Government Audits.

May 9 –  Happy belated Mothers’ Day! Mothers teach us many valuable lessons. Unfortunately, some people forget those lessons. Consider risks associated with those that fail to remember that maternal wisdom in the article, All in a Dishonest Day’s Work.

May 2 –  Manage Your Risk Monday is back! Now that busy season is over, are you looking for CPE? Join us for an AICPA webcast Accountants Liability – Raise Your Risk IQ (Tax Focus) on May 17, 2016. The webcast will focus on professional liability exposures arising from the delivery of tax and related services. If you are a CNA policyholder, don’t forget the discount code for special pricing!


December 28 –  What a year! You survived the final IRS changes to the Tangible Property Regulations, implementation of the Affordable Care Act and many other challenging accounting issues in 2015! Enjoy the last few days of the year and join us for more helpful professional liability recommendations as Tax Tip Tuesday returns on January 5, 2016.

December 21 –  Sharpen your pencils, make sure your coffee maker is in working order and load the printer! Busy season is just a few short weeks away. While you are preparing, consider The Importance of Gauging a Client’s Tone at the Top.

December 14 –  The holiday season is officially upon us! Worried you left someone off your holiday card list? Make sure to show the same diligence in sending engagement letters. AICPA Professional Liability Insurance Program policyholders may access sample engagement letters in the Policy Holder Resource Center.

December 7 –  Whether a game of taxes, a clash with clients, a storm of  S-corps or a dance with disclosures, Busy Season is Coming – Prepare Now to Manage Your Professional Liability Risk! Join us December 10, 2015 at 11:00 AM Eastern for a webinar discussing methods financial statement service and tax practitioners can implement to help reduce professional liability risks during busy season.

November 30 –  Have you been receiving a little extra mail lately? Why are your clients’ brokerage statements being sent directly to your office? Are you The Accidental Investment Adviser?

November 23 – Are you anticipating the pumpkin pie baked from the secret family recipe? Thanksgiving would not be the same without it! An engagement letter is just as essential to the services provided by CPA firms. Don’t miss out on the recipe for a successful engagement,. Read Grab a Lifeline to help avoid common mistakes. Happy Thanksgiving!

November 16 – Will Rogers said it (perhaps a bit too) bluntly, “Never miss a good chance to shut up.” CPAs should consider these candid words of wisdom when providing advice to clients. Reading Write It Down: The Importance of Documenting Oral Advice may help you reduce your professional liability risk.

November 9 – According to the Centers for Disease Control and Prevention National Vital Statistics System (CDC/NCHS) , there were 6.8 marriages and 3.4 divorces and annulments per 1,000 individuals in the United States in 2012. The rate of divorce is staggering and presents a difficult situation that many CPAs will encounter while providing services. Do you know the steps you should take in Avoiding Becoming a Casualty in the Divorce Wars?

November 2 – Looking to obtain those last few hours of CPE before the end of the year? Please join us for an AICPA webcast, Accountants Liability – Raise Your Risk IQ (Financial Statement Services Focus), Friday, November 6, 2015 from 1 – 4 pm EST. The webcast focuses on accountants professional liability exposures arising from the delivery of financial statement services. Click on the link to find out more! And if you’re a CNA policyholder, don’t forget your discount code.

October 26 – Kicking dirt onto home plate may be an acceptable practice in a World SeriesTM dispute between baseball managers and umpires, but CPAs should consider a more civilized resolution process with clients. Learn more about engagement letter clauses that may help minimize your professional liability risk with Weighing strategies to limit litigation risk.

October 19 – Approximately 179,456,205 tax returns were filed during Tax Year 2013, according to the Internal Revenue Service Statistics of Income. It must feel as though you completed 100 million returns yourself for Tax Year 2014! Is now a good time to Identify “Problem” Tax Clients to avoid next tax year?

October 12 – The final deadline for the 2014 tax year is only three days away! Since our tax colleagues are focused on the finish line, here is an article for the auditors out there, Defending Third-Party Audit Claims.

October 5 – Social media can be a great tool to help promote your business (or to distribute weekly risk management tips!) Have you ever thought about the potential risks of social media to your business? Read the article, Social Networking - The Risks and Rewards of an Interactive Presence, to find out more.

September 28 – September is a great time of year for sports…baseball playoffs…football weekends. Wondering what an engagement letter has in common with a football field and a baseball diamond? Find out by reading our article, Don’t let scope creep lead you out of bounds.

September 21 – How important is “quality” to you? Would an automobile aficionado even consider buying an inferior quality car? Or would a fashionista purchase a poorly made pair of shoes? Hear from a panel of accounting experts on the importance of quality in the delivery of services in, There’s No Substitute for Quality.

September 14 – The prospect of a prestigious or highly profitable client can be very attractive.  Nevertheless, such clients may pose significant risk.  Be sure to complete your client acceptance procedures, and ask yourself, Is This Client the Right Fit for Your Firm?

September 8 – Happy belated Labor Day! Were you thinking about CPE on your day off? Join us for an AICPA webcast Accountants Liability – Raise Your Risk IQ (Financial Statement Service Focus) on September 21, 2015. The webcast will focus on professional liability exposures arising from the delivery of financial statement services. Click on the link to find out more! AICPA Professional Liability Insurance Program policyholders receive discounted pricing!

August 31– Unlike a good wine, claims do not get better with age. Aware of an error or omission that may lead to a professional liability claim against your firm? The historic conversion rate of potential claims reported by CPA firms in the AICPA Professional Liability Insurance Program to actual claims is approximately 7%. Timely reporting of potential claims may not only be required by your professional liability policy, it may also help reduce claim severity and the time needed for resolution. Find more information on claims here.

August 24 – You issued your audit report last week, and now your client wants to discuss some new developments! Read this month’s Journal of Accountancy article, What now? Responding to Subsequent Discovery of Fact, for useful tips on how to help protect your firm from a professional liability claim in the event new information is discovered after audit report issuance.

August 17 – Are you getting tax questions while lining up your putt? Read Avoiding Allegations of Improper Tax Advice, so you can respond appropriately, clear your mind of professional liability risks and sink the putt.

August 10 – The end of summer is around the corner and more tax deadlines are looming. While you aren’t buried in tax returns, maybe now is a good time to review your tax quality control procedures. Not sure where to start? Read our article on the topic, The Importance of Tax Quality Control.

August 3 – “An ounce of prevention is worth a pound of cure.” -Benjamin Franklin. Can this sage advice apply to your accounting practice? Is communication your ounce of prevention? Learn more in our article, Effective Communication: The Best Medicine to Avoid Litigation?

July 27 – Providing advice is one thing, but finding time to document is quite another. Read this month’s Journal of Accountancy article Providing Client Advice: Documentation is Your Ally in Tax and Other Services, for advice on what to include in workpaper and other documentation.

July 20 – According to the 2014 Trustwave Global Security Report, 71% of all data breaches are detected by third parties. CPAs work with large amounts of sensitive client data. What should you do if you discover a data breach? Read our article A Possible Privacy Breach: What Next?

July 13 – Engagement letters are essential!!! If it’s not worth memorializing in an engagement letter, the engagement is just not worth pursuing. All services should be agreed to in an engagement letter, even bookkeeping and personal tax services. Read the article, Buckle up: The importance of engagement letters, on practical ways to implement engagement letters at your firm.

July 6 – Happy belated Independence Day!  We hope that you were able to celebrate the holiday weekend with family, friends, food, fireworks and festivities. While independence is on your mind, please take the opportunity to refresh your knowledge of the importance of maintaining independence in appearance by reading the article Independence is in the Eye of the Beholder.

June 29 – How nice that a client thinks so highly of you they’ve asked you to be executor of their estate. Or is it? Didn’t they say something about disinheriting one of the kids? And isn’t there a brother-in-law that’s been very difficult? Before agreeing to serve as a fiduciary, read the article Fiduciary for a Trust or Estate? Consider This for items to consider before agreeing to provide such services.

June 22 – CPA firms often use subcontractors to provide administrative and professional services. Use of third parties to provide administrative or technical services is not without risk.  The Journal of Accountancy article Confidentiality, Due Diligence and CPA Firm Subcontractors provides examples of how these relationships can result in a privacy breach for the firm and recommendations on how to help mitigate this risk.

June 15 – Has a client ever asked you to refer them to a good attorney? What about an investment advisor? While it’s great that a client trusts your judgment, professional liability claims have arisen from such recommendations. The article Risks of Professional Referrals provides suggestions on how to respond to your client’s request and help mitigate the firm’s risk.

June 8Is a client undergoing a “business divorce?” If so, the article Avoiding Conflicts of Interest and webinar Stuck in the Middle – Avoiding Conflicts of Interest discuss conflicts and helpful hints on how to minimize the risks of providing services to those clients. For information on how to approach a conflict, The Tax Adviser article Practical Approaches to Common Conflicts of Interest is a useful resource.

June 1One of the tax clients you just terminated requested their “file” to give to their new CPA firm. What, if anything, should you give them?  If a current or former client requests copies of a CPA firm’s records, refer to When Parties Come Knocking for Client Records for tips on how to respond. If you cannot find the answer there, CNA policyholders have access to Requests for Records – A Guide for CPA Firms.

May 25Enjoy your day off! We’re taking one too. Here are some things you may not know about Memorial Day.

May 18It seems like data breaches are now an everyday occurrence. No industry is immune from a security failure, whether it is the result of a phishing attack or a lost flash drive. Fortunately, cyber insurance for CPA firms is easy to obtain. Check out the AICPA Professional Liability Insurance Program’s NetProtect® endorsement available to all sizes of CPA firm.

May 11Can you believe that client? The client provides the tax information on April 12 and demands that the returns be filed by April 15. Now is the time to terminate these clients. Having trouble identifying them? The article Clients: Knowing When to Walk Away provides some common characteristics of problem clients. Refer to Client Termination Letters for tips on how to write an effective client termination letter.

May 4Looking for CPE? Join us for an AICPA webcast Accountants Liability – Raise Your Risk IQ (Tax Focus) on May 27, 2015. The webcast will focus on professional liability exposures arising from the delivery of tax and related services. Click on the link to find out more! And if you’re a CNA policyholder, don’t forget your discount code.

April 27Have you enjoyed Tax Tip Tuesdays? If so, stay tuned for Manage Your Risk Mondays. If you can’t wait, check out Frequently Asked Questions of CNA, the endorsed underwriter of the AICPA Professional Liability Insurance Program.