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CPA Now
Apr 06, 2020

Risk Mitigation Strategies in the Time of COVID-19

Jonathan ZissBy Jonathan S. Ziss, JD


CPAs, along with the rest of the economy, are struggling to operate with a sense of normalcy under the cloud of the COVID-19 pandemic and its unprecedented challenges. But despite the ever-present concerns and distractions of such a far-reaching health and economic emergency, professional risk must remain top of mind. Certain important due dates (such as tax filing) may have been relaxed, but the standards of due care most certainly have not.

With this in mind, consider the following tips for maintaining scrupulous professional hygiene in the days and weeks ahead.

Financing and Financial Relief

Whether applying for a small business loan or attempting to renegotiate a lease, clients may look to you to confirm their creditworthiness. Providing comfort in times of crisis is a good instinct, but you must take great professional care when communicating with a third party concerning a client’s financial condition. Ask your professional liability insurer or attorney for advice on how to handle these requests.

Disclosure Requirements

Auditors must consider whether disclosures or modifications need to be made to financial statements and to reports regarding the current economic realities. For guidance, see Consequences of COVID-19 – Financial Reporting Considerations, a publication of the AICPA’s Center for Plain English Accounting.

Fraud

Consider how COVID-19 might play into the fraud triangle (opportunity, incentive, and rationalization). With staff layoffs, intense financial pressure, and a survival-mode mentality, incidences of fraud could increase within your clients’ places of business. This is especially so if previously segregated financial functions have been consolidated due to illness or layoffs.

Using at-home work devices to reach out to clientsTouch Base with Your Clients

New information, much of it unexpected, is being published by taxing authorities, and not all of it is clear. Be the trusted go-between that your clients expect you to be. Help them navigate these uncharted waters. Do not assume that your clients are absorbing the flood of guidance surging online. (The public hears what it wants to hear. Your job is to get them to hear what they need to hear.) Importantly, be sure to document your discussions

Cybercrime Risk

With a homebound workforce that is likely more distracted and less attentive to email scams and malicious links, bad guys are being especially opportunistic. Managing cyberthreats is also technologically more challenging with a remote workforce. Emphasize this to your colleagues and staff, then emphasize it again. You do not want to face a ransomware attack or identity theft ever, and especially not during a crisis. For more information, check the resources available at IRS.gov (Identity Theft Information for Tax Professionals). Also, consider speaking with your insurance broker about cybercrime insurance.

Staffing

For employers, these are days of many questions. Workforce reductions are being considered in earnest, novel overtime questions are being posed, and surprising expense reimbursement queries are being submitted. These and other unprecedented workplace scenarios are challenging management’s conventional wisdom. The CPA community itself is not immune to employment liability claims, which are expected to soar across the economic spectrum. Questions about wage and hour compliance, layoffs, unemployment benefit eligibility, and so on are legion. Do not guess, and do not provide what could be construed as legal advice. Get help. One resource for general guidance is the Employer Preparedness Toolkit hosted by the payroll and benefits company ADP. For specific guidance, speak with a knowledgeable employment attorney.

Communicate with Your Team

This is especially important if you have moved to a remote work environment. The displacement of all things routine will affect each person differently. Encourage a new and healthy remote work lifestyle. Preach regular work hours with time for exercise and diversion. In addition, be attentive to potential struggles. Do not assume that everyone is secretly happier working from home. The opposite of social distancing – enhanced teamwork, increased reliance on phone calls, and short video chats – are an ideal tonic to cure blues and boredom and to keep everyone rowing hard and straight through the rough water ahead.

Professional risk management requires good habits and the discipline to maintain them. For more information, look to the AICPA’s Essential Habits for Working Remotely.


Jonathan S. Ziss, JD, is a partner with Goldberg Segalla LLP in Philadelphia. He can be reached at jziss@goldbergsegalla.com.


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Disclaimer
Statements of fact and opinion are the authors’ responsibility alone and do not imply an opinion on the part of PICPA officers or members. The information contained in herein does not constitute accounting, legal, or professional advice. For professional advice, please engage or consult a qualified professional.