Wednesday, December 28, 2005

As bad as it seems for us, other professionals have malpractice problems as well.
In its most recent study of claims experience, from its more than 7,000 accounting professional clients in 44 states, the Redwood City, Calif.-based insurer has found tax work accounts for the most claims filed and the highest total dollar volume of damages sought. Camico is second, behind a program sponsored by the American Institute of CPAs (AICPA), among the profession’s most prominent professional liability insurance carriers.

Tax ranks highest among the service areas generating claims because it is among the services accounting professionals are most likely to offer and its technicalities can mean a minefield of risks. The technical nature of tax work “places most of the burden for decision-making on the CPA (s),” who at the same time “are limited in what they can ask clients,” says Ron Klein, Camico’s vice president of claims.

“It's much like a patient seeing a doctor about a serious, complex medical condition; the problem and treatment are so critical that the patient will ultimately go with the treatment the doctor recommends.” he adds.

Following tax on the list of leading areas for generating claims are, in respective order: financial statements, investment fraud and defalcation. Within tax work, technical income tax issues are the primary area of loss, followed by S and C corporation elections and estate planning.