ACCT101 Accounting and Financial Report : About Professional Liabiliti

Introduction:

The report aims to identify the professional liabilities of the accountants of a small and a large firm. It compares the various aspects of liabilities faced by them. The accountants of a small company have fewer liabilities than the bigger one (Green, 2014). They act differently in different situations and handle various issues according to the need and norms of the company.

Data protection:

Financial organizations use various methods to protect data in order to maintain the integrity and safety of the client’s data as well as account information. It is the liability of all kinds of financial firms. The most popular belief is that the hackers are the greatest threats of the personal data but in most cases, the corrupt employees are responsible for breaching privacy data. From an accountant of a large CPA firm, the company is completely aware of this fact and provides the clients data protection coverage (Yadav, 2014). Whereas, small-to-mid-sized firm accountant group believe themselves immune and do not expect huge loss when the client’s data are compromised.

Fraud:

Employee fraud is a very frequent incident in any organization but it leaves a more negative effect when employee theft takes place in any CPA firm client. In these cases, the auditors are one to be blamed. To a smaller firm, the accountants are not very concerned about it, as they do not feel targeted due to their size. Despite the fact that the accountants are not responsible for detecting fraud but when a company grows, the exposure increases and the liability falls on the accountants for quality control (Hadi, 2014). The group of accountants working in a larger firm has engaged themselves to look after their risk management that continues to grow with the growth of the company.

Engagement authentication:

The accountants of the larger company produce the engagement documents with proper details of provided accounting services and client’s signature. This helps to refer the scope of expertise and limitations of responsibility so that no trouble regarding engagement arises (Koleva & Gorgieva-Trajkovska, 2016). On the other hand, the small firm accountants believe these documentations cannot prevent clients from suing the company.

As the CPAs are assisting clients to manage and transfer their wealth, the large firm accountants involve with the right parties and update the documentation. This is one of the most important tools to dispose to the defense counsel at the time of claim. Therefore, when the specialists begin to review they will get idea about the company’s service quality. This accountant group believes that if they maintain good documentation, they can interpose and eliminate problematic claims.

Merger:

As business slows down, the companies tend to merge. This can be the highest exposure for a company. The accountants of the larger firm consider and analyze various issues that may affect the acquiring company later on. Before acquisition, they ask for peer review history or claim history to mitigate possible exposure.

Conclusion:

Therefore, the comparative attestation analysis proves that the two groups of accountants have different ideas regarding professional liabilities. In order to increase company’s growth, the accountants must keep track of the expenses related to the various aspects of the organization.

References:

Hadi, K. A. A., Paino, H., Ismail, Z., & Dhiyauddin, M. H. (2014). Forgery in the making of audit report: the liabilities and breach of professional duties. Procedia-Social and Behavioral Sciences, 145, 110-115.

Koleva, B., & Gorgieva-Trajkovska, O. (2016). Accountancy planning and control-a necessity of management process. Academic Journal „Management and Education “Burgas, 12(1), 10-15.

Yadav, B. (2014). Creative Accounting: an empirical study from professional perspective. International journal.

Green, W. L. (2014). History and Survey of Accountancy (RLE Accounting). Routledge.