Typical Liability Risks for Accountants
Accountants often face legal action. It costs the person bringing the suit almost nothing to drag you to court by claiming that their financial decisions were ill-advised or mishandled in some way, and the potential payout can be huge. Each liability in accounting can cause problems, no matter how careful you are. Many people are willing to go to court for the slightest perception of a problem. Not only can such a suit harm your professional reputation, it can also be costly if you don’t have the proper insurance to cover it.
There are several risks that accountants run in their daily work. The slightest error can lead to a lawsuit, even if everything else in the service you provided was exemplary. If you neglect to give a client a viable option, he or she could sue you and maybe even win if damages proved significant. Any misinterpreted or misleading statement can catapult you into a settlement conference. If you failed to provide a service you promised, or if it appears that you have not protected a client’s privacy as well as you should have, you are likely to be taken to court. You run the risk of liability in accounting with every interaction, so it just makes good sense to talk to your insurance agent to ensure you have the coverage you need.