Page 323 - JoFA_2022

PROFESSIONAL LIABILITY SPOTLIGHT

Another trend in claims — particularly those create and fund the separate account, thus
related to audit services — has been the increase diminishing the amount of the wife’s assets
in damages asserted when a claim is made. Class inherited by her children.
action lawsuits and “nuclear” verdicts, whereby
juries award an exceptionally high figure that Future considerations
is disproportionate to the actual damages, have Claims related to consulting services will likely
become commonplace, fueled in part by an continue to increase as this area of practice
increase in litigation funding, whereby a third grows and CPAs lean further into the role of
party funds a lawsuit in exchange for a share of trusted business adviser. Why? Claim history
any award. has demonstrated that the more services a CPA
firm delivers to a client, the more likely that the
CONSULTING SERVICES CPA firm may be blamed for a client’s losses and,
Current claim trends consequently, face a claim.
Consulting services claims comprised 9% of all
claims asserted in 2021. This percentage may Sarah Beckett Ference, CPA, is a risk control director
sound insignificant. However, compared with at CNA. For more information about this article,
2020, consulting claim volume is up 50%, an please contact specialtyriskcontrol@cna.com. ■
unsurprising trend as more firms expand their
service offerings beyond the traditional audit Continental Casualty Company, one of the CNA insurance companies,
is the underwriter of the AICPA Professional Liability Insurance
and tax.
Program. Aon Insurance Services, the National Program Administra-
Consider this claim asserted in 2021:
tor for the AICPA Professional Liability Program, is available at
800-221-3023 or visit cpai.com.
A CPA firm was engaged to provide bill This article provides information, rather than advice or opinion.
It is accurate to the best of the author’s knowledge as of the article date.
payment, cash management, tax preparation,
This article should not be viewed as a substitute for recommendations of
and tax planning services to a wealthy couple
a retained professional. Such consultation is recommended in applying
and the adult children from the wife’s first this material in any particular factual situations.
marriage. After the wife died, a separate Examples are for illustrative purposes only and not intended to
investment account solely in the husband’s establish any standards of care, serve as legal advice, or acknowledge
any given factual situation is covered under any CNA insurance policy.
name was revealed. The wife’s children
The relevant insurance policy provides actual terms, coverages, amounts,
brought a claim against the firm alleging that conditions, and exclusions for an insured. All products and services may
the engagement partner helped the husband not be available in all states and may be subject to change without notice.

Audit and attest services claims asserted in 2021 by cause of loss

 Failure to detect misstatement or
33%
disclosure error, 33%
 Failure to detect theft or fraud, 33%
17%
 Fee dispute, 17%
 Other, 17%
33%
17%

Source: CNA Accountants Professional Liability Claim Database, underwritten by Continental Casualty Company.
Copyright © 2022. All rights reserved.

6 | Journal of Accountancy August 2022