“CPAs in public practice provide an ever-expanding range of services to their clients,” Jonathan S. Ziss, partner in Goldberg Segalla’s Professional Liability Practice Group, writes in Pennsylvania CPA Journal. But, he explains, the professional liability insurance markets might not be “keeping pace” with all the services CPAs now offer, and the risks they take “on the frontier of evolving areas of work.”
As CPAs start to offer services in new and rapidly advancing fields — like predictive data analytics, increasingly common among CPA services — they run the risk of an error that could lead to a claim of professional negligence. “Whatever can go right can also go wrong, which can result in a claim,” Jonathan writes. However, a claim of professional negligence for data analytics might not qualify as “accounting” from a malpractice insurance standpoint.
There are some “boundaries” to what might constitute a legitimate “professional service” covered under professional liability insurance policies for CPAs. For example, selling real estate would not be covered. However, most professional liability insurance policies define “professional services” broadly, which means new CPA services are often included.
As the field continues to evolve, both insurers and professionals need to pay close attention to the language of policies as well as applications to ensure all services are covered. Beyond that, professional accountability is a necessary defense against negligence claims. “[B]e ready to meet the standard of care for any novel, innovative, or otherwise unfamiliar services you may offer,” Ziss writes. “Good insurance is no substitute for good work.”