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.

Click Here to Get A Quote!



Share this post

Leave a comment

Filtered HTML

  • Web page addresses and e-mail addresses turn into links automatically.
  • Allowed HTML tags: <a> <em> <strong> <cite> <blockquote> <code> <ul> <ol> <li> <dl> <dt> <dd>
  • Lines and paragraphs break automatically.

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.

Latest Articles

  • 29 Oct

    CAMICO and CPA Mutual Reach Agreement

    CAMICO and CPA Mutual Conclude Agreement to Transfer Accountants Professional Liability Insurance Program to CAMICO


    CAMICO, the nation's largest CPA-owned and directed program of insurance and risk management for the accounting profession, has reached an agreement with CPA... read more

  • 02 Oct

    Navigating Complex Conflicts of Interest

    While potential "conflict of interest" issues often arise because of married clients getting a divorce, other types of "splits" that may involve a dispute among shareholders, LLC members, partners and beneficiaries also present potential conflict-of-interest situations. The latter scenario... read more

  • 19 Aug

    Do You Believe You Will Never Be Sued?

    Some CPAs believe that they will never be sued and therefore believe they do not need professional liability or other forms of insurance. The reasons for this position vary, but some common ones include, "I don't make mistakes," "All of my clients are friends," or "I do tax work only." The... read more