By Mark Thomas, Ken Mackunis and Stan Sterna.
For CPAs and their firms, 2021 has been a year of unexpected challenges and opportunities, both of which have generated new risks for the profession. And the outlook for the coming year is not much different, with accelerating changes and emerging issues impacting the way accountants approach the services they provide.
As we move into 2022, CPAs should keep three key areas of risk in mind when serving their clients and looking to grow their practice.
Professional liability risks:
In 2021, CPAs faced unprecedented change. One of today’s biggest professional liability risks may come somewhat unexpected: relationship building. As a CPA, knowing your client is a crucial part of a successful collaborative relationship. However, many CPAs have struggled to stay on the same page as their clients amid ever-changing global events, revised laws, a changing economy and the advent of a changing environment. distant. If you’re a CPA, chances are your client isn’t the same person they were a year ago – maybe their business concerns have changed, or maybe they’ve even taken a new job recently – expectation of you as a trusted financial advisor has probably increased tenfold.
Over the past year, CPA firms of all sizes have been forced by events to adopt new technologies, such as virtual communication platforms, secure file exchanges, cloud-based applications and tools. artificial intelligence. As 2022 approaches, CPAs will need to pay close attention to their relationships with third-party software vendors. Business leaders and CPAs should rethink how they manage these relationships and the liability risks inherent in them. After all, sharing sensitive financial data with a third party is a risk in itself. As such, CPAs should exercise due diligence when auditing these providers. Additionally, ensure that service agreements require these vendors to maintain a breach of privacy as well as professional liability coverage and language that they agree to defend, indemnify, and hold the company harmless from. any violation or error / omission on their part.
Retention / talent of CPAs:
Meanwhile, the big resignation of 2021 has led to an increase in staffing issues for organizations nationwide – CPA firms being no exception. In April 2021 alone, 4 million Americans left their jobs, leaving companies to scramble to attract and retain talent. CPA firms have sensed this change keenly, with a significant number of accountants shifting their careers in another direction or to other firms. With flexible options available for hybrid and remote work, the job market has expanded significantly for CPAs, allowing them to take on positions at companies located in a neighboring state or across the country without having to relocate. physically while providing better benefits, higher wages and other desirable benefits. advantages. This employee migration has left many business leaders struggling to retain talent and staff their teams, forcing them to rethink the current culture and structure of their companies.
In 2022, the challenges of retaining talent are likely to continue, forcing business leaders to take a closer look at their team building and recruiting plans. That said, CPA firms should be able to take advantage of the larger employment landscape. For example, business leaders will be able to recruit outside of their company’s geographic area and have better access to highly qualified candidates. In addition to expanding recruiting efforts, leadership teams will need to assess their current team members and take the necessary steps to retain quality staff by bolstering benefits, increasing salaries, or investing in staffing programs. improvement.
Meanwhile, cyber risks have accelerated by more than 100% since the start of the pandemic, making businesses and CPAs more vulnerable than ever to a privacy breach. One thing we have learned over the past year is that no one is safe from a cyberattack. As aggregators of all kinds of financial and personal data, accountants are prime targets for cybercriminals. Small businesses are just as vulnerable, if not more, than large ones. After all, cybercriminals tend to target companies with weak data security protocols. Often, it is small businesses that have fewer resources to invest in cybersecurity. Hackers feed off a victim’s fears, confusion and sense of urgency. As the pandemic continues, expect cybercriminals to continue doing all they can to exploit the crisis.
As the frequency and severity of professional liability and cybersecurity risks continue to increase, CPAs and firm leaders should review their current quality control and data security protocols. They should ensure that engagement letters are in place for all departments which, among other things, clearly define the scope of their work, the responsibilities of the respective parties to the agreement and limit their liability. In essence, CPA firms should leave “no stone unturned” when it comes to managing risk.
2021 has been a monumental year, and CPAs have seen industry-related trends that have required changes both positive and negative. From heightened cybersecurity and professional liability risks to broader growth opportunities for CPAs and firms, this year has laid a solid foundation for how business leaders and their employees can approach 2022 with insight and confidence. seasoned.
Mark Thomas is Senior Vice President of Aon Affinity, Ken Mackunis is Executive Vice President of Aon Professional Business Segment and Stan Sterna is Vice President of Aon Corporation. Aon provides insurance through the AICPA Membership Insurance Program and is a multinational professional services company that sells a range of financial risk mitigation products including insurance plans, administration, pensions and health insurance. Aon has approximately 50,000 employees in 120 countries.