Accountants are essentially hired by clients to avoid financial risks but the irony is that the profession itself comes with many risks. For a chartered accountant, the health of the company must be prioritized but it is also crucial for the professional to watch out for risks as they carry out their duties and responsibilities. This is the reason why chartered accountant insurance also known as errors and omissions insurance policy is considered to be very essential for a practicing accountant.
A chartered accountant plays many roles inside the company and their tasks includes taxation, investment advice, accounts preparation, management and bookkeeping, migration services, audit, IT consultancy, business valuations and forensic accounting.
No matter how good a practitioner is in the field of chartered accounting, they are always at risks of facing claims and potential claims. Losses in the side of the client will make them think of ways to recover from the financial costs despite the good work rendered by the accountant.
Despite having all the resources, a frivolous claim can have a huge impact to the professional. These risks are not within the control of the accountant including reputational risks and the claim comes with a certain burden as well. Therefore, it is essential that the accountant follows the requirement of the client and does their work accordingly. Chartered accountants, as much as possible, should avoid lawsuits because many of them do not have the financial resources to manage the situation.
No matter how good an accountant, human errors can happen. This is when chartered accountant insurance will prove to be helpful. The policy includes breach of the professional responsibility of the accountant, defamation, breach of intellectual property rights, misleading and deceptive manners, and defense costs resulting from claims and losses as well as damages caused by fraud.
The insurance will make sure the professional is covered when allegations are filed and the insurer will cover financial costs leading to the lawsuit. The only thing the accountant should note is that the policy must be active during the time when claims are made. It is important to make sure that the chartered accountant insurance is active during the loss as well as the filing of the claim.