Question

Discuss at least five of the actions that can be taken by individual CPAs, to protect themselves from legal liability

Answer 1

Discuss at least five of the actions that can be taken by individual CPAs, to protect themselves from legal liability

Answer:

1) Follow Professional Standards - CPAs should follow professional standards to protect themselves form legal liability.

2) Hire qualified personnel and train and supervise them properly: An individual CPAs should hire qualified personnel and also provide training to them.Before adding a new client, think long and hard about whether you have the right people to take on the engagement.

3) Maintain independence : An individual CPA should maintain independence, which means they should not have any financial interest in client business.

4) Document the work properly: Documentation is the major support to protect from any liability, it is an evidence of work done by CPAs, having proper documentation is necessary to themselves from legal liability.

5) Obtain an engagement letter and a representation letter: CPAs should before statrting any work for client have to take engagement letter which is like an agreement of work to be done, or we can say an appoitmnet letter, this can be a evidence to protect themselves from legal liability.