For CPAs and their firms, 2021 was a year of unexpected challenges and opportunity – both of which producing new risks for the profession. As we enter 2022, there are three key areas of risk that CPAs should keep in mind as they serve their clients and look to grow their firms.
Professional Liability Risks:
Over the last year, CPA firms had to adopt new technologies, such as virtual communication platforms, secure file exchanges, cloud-based applications and artificial intelligence tools. As 2022 approaches, CPAs will have to pay particular attention to the relationships they have with third-party software vendors. CPAs should conduct vigorous due diligence when vetting these vendors. Additionally, make sure service agreements require these vendors to maintain privacy breach as well as professional liability coverage and language that they agree to defend, indemnify and hold the firm harmless for any breach or error/omission on their watch.
Meanwhile, 2021’s Great Resignation resulted in increased staffing issues for organizations nationwide – with CPA firms being no exception.
With flexible options available for hybrid and remote work, the job market has widened significantly for CPAs, allowing them to fill roles at firms across the country without having to physically relocate while offering better benefits, higher salaries, and other desirable perks. This employee migration has left many firm leaders struggling to retain talent and fill their teams.
In 2022, the difficulties with retaining talent will likely continue, forcing firm leaders to take a closer look at their team building and engagement staffing plans. That said, CPA firms should be able to take advantage of the broader employment landscape.
Cyber Risks:Cyber Risks:
Cyber risks have accelerated more than 100% since the start of the pandemic, therefore, making firms and CPAs more vulnerable to a privacy breach than ever before. As the frequency and severity of both professional liability and cyber security risks continue to climb, CPAs and firm leaders should revisit their current quality control and data security protocols. They should ensure that engagement letters are in place for all services that – among other things – clearly define the scope of their work, the responsibilities of the respective parties to the agreement, and limit their liability.
From increased cyber and professional liability risks to broader growth opportunities for CPAs and firms, this year has established a solid foundation as to how firm leaders and their employees can tackle 2022 with seasoned insight and confidence.