By Robert Albertini

COVID-19 has significantly affected how clients conduct business and manage their financial affairs. It has spurred increased demand for CPA-provided CFO and client accounting consultative services, and, because of social distancing, it has led to a greater use of electronic signatures. Both of these come with unique risks that CPAs need to understand and mitigate.  

Provide Outsourced Services with Care

Even before COVID-19, the accounting industry was increasing its cloud-based technology and focus on digital transformation. These have only accelerated by pandemic-induced realities, such as PPP loan application struggles and work-from-home staffing issues.

Organizations are relying on CPAs, “the most trusted advisers,” more than ever to fill gaps and assist with business needs. This all comes with a risk. Specifically, CPAs may experience an expectation gap between their firms and their clients.

Here are a few tips to level expectations:

• Have engagement letters for all client work, and update these letters regularly to reflect any scope changes. Then stick to the responsibilities outlined in the letter. This simple document is still a CPA’s best defense against a lawsuit.
• Do not handle management functions. One way to limit this expectation gap is by clearly communicating the CPA’s role. CPAs must be honest about their role and the scope of their service. It should always be the client’s responsibility to pull the trigger on management decisions.
• The CPA should never refer to himself/herself as a CFO or executive. Also, avoid being presented in communications and marketing materials that imply a handling of management responsibilities.
• When CPAs have access to client funds, they should conduct background checks on any employee who has access to these funds, especially in this day and age where some partnerships have only manifested online.  
• Address any insufficient funds with a client as soon as they are found, and validate all client wire transfer requests. Checks and balances are especially critical today.

Signing with Care

E-signatures have become more necessary in our virtual business world and have gained acceptance at all levels of business. In 2020 the IRS approved temporary use of e-signatures for certain forms through at least the end of the year. It is important for CPAs and their clients to be aware of some of the rules and regulations behind e-signatures:

• The E-Sign Act covers rules of validity for electronic records and signatures for transactions in or affecting commerce.
• The Uniform Electronic Transactions Act is a uniform code put into place to harmonize state laws concerning retention of paper records and the validity of e-signatures. The act has been adopted by 48 states.

Even with these regulations in place, CPAs and their clients must perform due diligence when using e-signatures. First, it is important to note that both federal and state regulations may come into play, so before integrating e-signatures into an organization be sure to check with counsel to ensure this isn’t creating greater risks for the business. Second, parties must keep a written record of electronic signatures to make sure that no data is lost. Additionally, CPAs should write electronic signature terms into their engagement letters so no one is surprised by any requests or requirements.

Finding an e-signature vendor is another important piece of the puzzle. When shopping for a provider, CPAs need to look beyond the price tag and make sure the vendor’s software is compatible with their systems and that their existing programs are safe from a cybersecurity perspective.

Conclusion

Diligence has always been an important trait among CPAs. Today, its importance has been even more elevated. Whether it’s taking an extra minute to make sure engagement letters are up to date or spending time screening e-signature providers, that diligence can help CPAs mitigate the risks they face on a daily basis and grow their practice despite a volatile business climate.

Robert Albertini is an account executive and senior business development for Aon Insurance Services in Fort Washington.

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