3 Ways CPAs Can Avoid Disputes

Document, document, document.

Keeping good documentation is the single best way to manage your risk. If you’re ever the subject of a lawsuit, your documentation can be the difference between escaping unscathed and being held responsible for damages. When a lawsuit goes to trial, the plaintiffs have the right to look through all relevant documents in a process called discovery. If you, as a defendant, have extensive documentation that makes it hard for the plaintiff to prove liability, they may be more inclined to settle the case early.

CAMICO’s strategy is to avoid disputes if possible, and good documentation can help in that regard. If your documentation is comprehensive, and you can demonstrate that you are not responsible for the issue at hand, your insurer will be better positioned to settle the matter before a lawsuit is filed.

Use documentation best practices.

Make sure that you keep copies of all significant records and communications with your clients, including email. Keep a log of calls and meetings you have with clients and write a summary of every meeting’s subject. Any pertinent conversation could become important in the event of a dispute.

It’s also helpful to retain copies of all documents your clients supply. We recommend setting up a secure web portal, which serves two purposes:

First, it will enable you to archive and secure your clients’ confidential information automatically. You’ll no longer have to manually file and organize documents, saving you and your staff time and effort.

Second, a portal makes it easier for your clients to share their information with you. They can provide the information online day or night, saving the hassle of an in-person office visit or the expense of a courier or postage.

Don’t be afraid to speak plainly with your clients—or part ways with them.

If you are uncomfortable with an action one of your clients has taken, you should alert them of your concerns and contact your insurer. If you select CAMICO as your insurer, we will guide you through steps to document the engagement to help limit your responsibility for unethical or questionable actions by your clients.

One of the most important tools in this area is the engagement letter. These letters contain specific language regarding client responsibilities and provide clarification and documentation to help avoid misunderstandings. Engagement letters cannot prevent improper action by your clients, but they can limit your risk if you discover malfeasance after the fact.

In the end, however, you should trust your instincts and professional judgment about your clients. If one of your clients places you in a position of risk, don’t be afraid to decline their business—and inform your insurer about the action and your reasons for it. One problematic client is not worth the price of stress, time, energy and money spent dealing with disputes and controlling damage.

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