There’s nothing comforting about bank comfort letters, is there?
Tom Hood recently took a closer look at the risks associated with the letters, which seek documentation from CPAs for clients’ mortgage and loan applications. That blog post offers some related guidance for CPAs, and I strongly urge you to check it out.
Now, the folks at CNA are chiming in with additional guidance on a whole lot more than just bank comfort letters.
In an extensive podcast interview, CNA’s Amy Waldron and Stan Sterna take a closer look at a series of risks that should be on every CPA’s radar screen. They include:
- Malpractice risks: They tend to become more frequent during trying economic times, when folks try to recoup their losses by reaching into the deep pockets of professional service providers like CPAs.
- Theft and fraud: CPAs should protect themselves by performing risk assessments of potential and renewing clients and engagements; by exercising due diligence and maintaining a healthy dose of professional skepticism; and by training staff to identify the warning signs of theft and fraud.
- Changing regulations: We’re all dealing with these lately, but CPAs have their hands full with (a) “Taxmageddon”-related changes in estate tax laws, (b) differences in reporting requirements between the Foreign Account Tax Compliance Act (FATCA) and Foreign Bank and Financial Accounts (FBAR), (c) changes in government auditing standards, and (d) new PCAOB auditing standards that address risk assessment and materiality in audit engagements.
- And yes, those pesky bank comfort letters: Waldron says CPAs should not comply with the requests contained in such letters. She explains why at about the 10-minute mark of the podcast.
In the interest of full disclosure, Aon and CNA are the MACPA’s preferred providers of professional liability insurance for members. Aon is the administrator of the program and CNA is the underwriter.
Listen to the podcast in its entirety, then tell us: What’s your biggest risk management concern these days?