General Information

I. Accounting Issues (Including Tax Treatments)

How to protect yourself from potential liability



  • Last updated: September 11, 2015
  • Latest Reply From: webee

Back to index |

Showing 1 > 1 of 1 posts

Litigation is an adversarial process. Even if the claim is eventually found in your favour, the time demands and stress of the claims process are enormous. With that in mind, accountants performing compilation engagements should take the following steps to protect themselves from potential liability:

1. Confirm with the client in writing that the client understands the limited nature of the engagement and the limited use to which the statements can be put.

2. Ensure that the work performed does not go beyond the scope of the compilation engagement and that if work is done beyond the scope of the engagement, that all queries that may arise from the extra work are cleared.

3. If a bank or other user contacts you, do not engage in a discussion about the financial statements. If that is unavoidable, clearly warn the caller that the statements were not prepared for that purpose and document in your files that you have done so. Communicate the limitations of the Notice to Reader.

4. Do not distribute financial statements prepared under a compilation engagement to third parties on behalf of your client, regardless of any request or pressure from your client.

5. Recommend that your client upgrade to an assurance (a review or audit) engagement if the intended purpose is to distribute the financial statements to third parties.

For more information, and to download the Risk Management presentation that provides other tips to avoid claims, visit www.aica.ca.



Showing 1 > 1 of 1 posts


You must be a registered and logged in user of this blog to post on this forum. Please Log In or .

II. Auditing Issues

III. Taxation

IV. Other Public Accounting Services

V. Practice Management

VI. CAs in Industry

VII. Technology

VIII. Professional Resources (Includes PD)

IX. Human Resources

X. Other Social Activities and Concerns