Professional Liability Insurance for Accounting （职业责任保险会计）.pdf

Professional Liability Insurance for Accounting Firms From Chubb Professional It’s Chubb. Or it’s Chance. Because an Expensive Lawsuit Can Be Damaging to Your Own Books More small to midsized accounting firms are successfully competing with larger firms by offering services beyond traditional accounting, such as financial consulting, mergers and acquisitions advice, strategic planning, and asset management for wealthy clients. New services certainly offer the potential for growth, but they also present “big firm” liability risks, too—risks that could result in financial catastrophe. Example 1 An accounting firm was hired to perform bookkeeping services for a small hotel client. The firm’s engagement letter stated that the services to be performed were limited to bookkeeping. The firm continued to service the client in this capacity for the next 10 years, but never sent an engagement letter after the first year. As a result of a tax audit, the client was required to pay over $500,000 in interest and penalties. The client alleged that the firm provided faulty tax advice. The firm contended that it never was engaged to provide tax advice as evidenced by its 10-year-old engagement letter. The client alleged that the nature of the services evolved over the 10 years and tax advice was offered. The firm settled the case by paying $350,000 to the client. Given the absence of an updated engagement letter, the client’s “evolving services” argument was compelling. Example 2 An accounting firm performed audit services for ABC Corporation, and tax services for John Q. Different partners serv