The reality of this day and age is that anyone providing professional advice, no matter how experienced they are, is at risk of being sued for negligence or breach of professional duty (duty of care).
Receiving notification alleging that an act of negligence or an error has occurred is enough to strike fear in anyone but now more than ever clients are much more aware of their rights to make a claim and are less afraid to act if it will achieve an outcome or financial return.
Systems, procedures and standard templates are one of the most efficient and effective ways to provide a layer of litigation protection for your accounting firm.
Ensuring proper regulation review of supervision systems and quality controls may require, in some instances, completely rebuilding your systems to minimise the risk of negligence and ensure your firm has a high practice standard.
Internal audits and reviews should be conducted regularly. Self reviews of files are extremely important too.
File notes, letters of engagements and disclaimers are also supporting documents to assist you in the claim process that act in your defence. Clear, concise and accurate file notes are absolutely critical after each meeting or discussion with your clients where actions are agreed or advice is given.
Your letter of client engagement sets out the rules of engagement with your client and is regularly updated. It continues during the life span of your client to clearly advise them of your service provision, costs and importantly what you expect from your client in return for you providing your services. For example , an expectation could be their responsibility to be timely with providing information and not give information to you the day before lodgment date.
Disclaimers can provide for defense if there is a possibility you may be sued. Whilst this will not limit the potential for a successful claim of negligence because the determination will be based on the circumstances as a whole, it could carry some weight. Make it bold and precise and brought to the attention of the person whom you are providing the services to.
We suggest you seek legal advice with the wording when including a disclaimer on your documents
Professional Indemnity insurance (PI) is the fall back protection required to insure risks, which still exist on a day to day basis for any accounting firm. Choosing the right provider is extremely important and understanding your insurance and risk managing your exposures will help in treating the risks within your accounting firm.
For an obligation free quote for your accounting firm, please call Accountancy Insurance on
1300 552 867 or complete a quick quote application by clicking on the link: https://www.accountancyinsurance.com.au/pi/application-form.html
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