Although we live in a litigious age, it's never a good feeling waiting for a summons and complaint from a disgruntled client to be delivered to your door. And as the severity of claims against accountants has been on the rise, limits on professional liability policies have remained level, according to Ron Parisi, executive vice president for risk management at Camico. "The limits on E&O [professional liability] policies have been stagnant over the last five to 10 years, while the verdicts are getting higher," he observed. "I would urge CPAs to be mindful of the limits of liability on their insurance as verdicts and losses are tending higher."

Parisi cited the recent lawsuit brought by noted author Patricia Cornwell against Top 100 Firm Anchin, Block & Anchin, which resulted in an award of $50 million. "A lot comes down to documentation, both between the client and the CPA, and internally within the CPA firm," he said. "When there's a lack of documentation, it creates a vacuum that juries tend to fill in negatively."

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