Specialists in business valuation knows how challenging it is to make sure that their practice is running smoothly while making sure they are not hit with major professional liability claims.
There are standards which they can make use of like the Statement on Standards for Valuation Services Number One under the AICPPA. This serves as a guide to know the best practices that can aid professionals in avoiding any liability while they are providing their valuation services. One of the best methods is to make us of technology that will help make the process faster and lessen the opportunity for any errors that can be committed by human hands. The resulting values are not only accurate and defensible but they are also accomplished faster. It is important that the technology must meet with the professional standards required.
Furthermore, one should be knowledgeable of the common issues that arise in business valuation so that professionals will be able to avoid committing such errors that might result to a professional liability claims.
It is not common to see claims against CPAs for professional liability when it comes to valuation while most common issues are mostly related to tax services. The problem is that claims related to valuations involves a larger amount of money, this is according to a statement made by the NAPLIA director of risk management, John Raspante, during a webinar. For tax services, the average amount for liability claim is only about $55,000 while for claims related to business valuation the usual average amount can reach $300,000 which only comes as second after the audit claims.
Business valuation claims usually roots from the following reasons – conflicts of interest, impaired independence, websites, limitations of use or distribution, limited or unreliable data and subsequent events. The websites of business valuation specialists should always be updated in terms of current staff working for the firm and the level of expertise of each of them. Any claims can be easily made if there is incorrect information. To protect these professionals, there is an accountant professional liability insurance that they can avail of.