Playing it safe: mitigate the risks of tax season.

• Position: News & Trends

CPAs wading into tax season should be aware of heightened exposure to liability, according to CAMICO Mutual Insurance Company. However, CPAs can take the following steps to mitigate the risks associated with tax work:

* Re-evaluate all clients and engagements at least annually to ensure the work doesn't extend beyond the firm's competencies.

* Identify potentially risky clients by running credit checks; examining previous financial statements; examining the client's prior accounting firm's management letters; and interviewing the client, the client's key personnel, bankers, legal counsel, prior accountants and auditors.

* Provide the client with a full consultation of all tax ramifications of S corp election. Document the consultation in an "informed consent" letter that provides a summary of the issues discussed. The...