While accounting firms branch out into niche practice areas, the most severe exposure to malpractice liability in terms of dollars remains audit, while the most frequent number of claims is still in tax, according to Tom Herendeen, vice president of the specialty lines division of Philadelphia Indemnity Insurance Co.Although post-Enron regulation has affected the way that accountants service their publicly held corporate clients, those who service private companies should not become overly comfortable.
"Even work with a closely held corporation has its risks," said Redwood City, Calif-based Camico vice president Ric Rosario. "For example, suppose a 60 percent owner commits fraud and the other 40 percent end up suing. It's not new, but we've decided that it is important to spend a lot more time training and talking about these issues. From an exposure standpoint, the key concern is audit."
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