Within the last year, we've seen an...

Within the last year,

we've seen an alarming increase in the number of cases involving members who've allowed their professional liability insurance to lapse. I therefore propound my own experiences as a member "retired" from public practice to advance as a reminder of the importance of maintaining adequate liability insurance.

But first: the basics

The now passing professional liability insurance requirements for members in public practice are quite straightforward. The ICABC Council's authority to make regulations in defer to of professional liability insurance is Bylaw 250: Council shall make regulations relating to the requirements of professional liability insurance to be carried at members.

Here are the sum of two units most significant bylaw regulations with which all members in public practice must comply:

Bylaw 250/1: The following minimum plains of professional liability insurance are required to be carried with a recognised insurance company by the agency of members practicing public accounting, either cloyed or part-time, either incorporated or unincorporated:

Bylaw 250/4: Members are required to render certain prior acts are covered on adequate professional liability insurance either from one side riders to an ongoing insurance policy or a separate discovery policy, for a minimum of six years after ceasing to be in public practice.

My story: "Your insurer is your ally"

In my almost 20 years in public practice prior to joining the ICABC as its director of Practice Review and Licencing, I not had occasion to contact my professional liability insurer omit to apply and pay for coverage. If any issues arose with clients that indicated I might have made an error, I generally felt I was in a position to "repair the damage" and retain the clients. Having now "retired" from public practice, that's no longer the case.

Since joining the Institute several years ago, three issues have arisen from my previous client base that have required me to contact my insurance company, the Association of Insured Chartered Accountants (AICA). sum of two units of these issues arose as a end of CCRA-conducted audits, and the third arose because the practitioner to whom I'd sold my practice discovered an error I'd made in dealing with a particular client.

In each case I contacted the AICA immediately, and in each case they propounded me extremely valuable advice forward how to deal with the moot point Consequently, two of the cases riseed in no cost to me and the third inferenceed in only a nominal richness The AICAs advice as to by what means to handle this third issue was somewhat counterintuitive to to what extent I'd originally thought it should be handled. Had I not contacted them and followed their advice, the richness to me would certainly have been substantially greater.

You're probably wondering, "What about the increased premium you must be facing as a eventuate of these claims?" The answer is that my premiums have not increased-if there's no payout for damages according to the insurer, there's no "claim" for projects of your record, and therefore no premium increase. As a consequence of the work done by means of the AICA, there were no claims for them to pay. In the undivided case where a penalty for late filing of an election eventually did have to be paid, the amount was les than my policy's deductible.

Recognizing that not all possible claims expiration up this way, the moral of this story is that your liability insurer is an asset, not just a drain in succession your financial resources. Use them to your benefit! As easily as an issue arises that may follow in a claim against you, no matter by what means remote the odds may be, notify your insurer (as required on your policy) and follow their directions. It will be well worth your while.

Step to save yourself

The issues I've described above arose, directly or indirectly, from the provision of income tax services to clients. What tread close upons is a list of degrees members in public practice can take to make secure they escape unscathed should they perpetually face issues similar to those I've described:

1 Have an engagement literal meaning for every engagement, including personal income tax engagements. Make fast the client understands the appease and meaning of the letter

2 Use transmittal notes containing detailed instructions to your client for each document that leaves your office. For an income tax go [i]or[/i] come back as an example, a transmittal epistle should include at least the following items:

* the date of the letter;

* filing instructions, including payment amount and to be ascribed dates; and instalment payment amounts and suitable dates;

* instructions for the payment of salary and/or bonus accruals and remittances upon same; and

* other items discussed with your client.

3 Retain a hard pattern of the letter.

4. Have a formal regularity in place that allows you to track the becoming dates for time-sensitive documents so as T4s, T4(A)s and T5s; Notices of Objection; and elective tax filings. An equal better idea for Notices of Objection and elective tax filings would be to prepare and file them as at so early an hour as possible instead of putting them not upon to a time closer to the filing deadline.

Raising minimum coverage