02 Jul Accountant Professional Liability Insurance- What You Need To Know
Listed companies and private companies are generally subjected to yearly audits. An audit is basically a review of the company’s accounts in order to ensure that they are free from material misstatements. Contrary to popular opinion, the auditor’s job isn’t to ensure that the accounts are properly made and that there has been no fraud. The auditor’s responsibility is to form an opinion on the statements provided by the company. In order to do this, auditors carry out analytical procedures and substantive testing on every material item in the financial statements.
For larger companies, the audit usually spans the whole year. Every head in the financial statements is individually tested, and inventory counts are also held in order to make sure that the company’s operations are as transparent as can be. Audits are required for companies that have a specific amount of capital and are listed on the Stock Exchange. Basically, the purpose of an audit is to lend credibility to the financial statements prepared by the company. Investors are more willing to believe the information in the financial statements if it has been independently verified by another company.
However, audits cost a lot of money. Most small businesses can’t afford to get their financial statements audited in the first place. That is why audits are a statutory requirement for listed companies. Most companies are also directed by the Australian Taxation Office to go for an audit if a discrepancy is found in their records.
Why Do You Need Insurance?
Buying an accountant professional liability insurance from private companies such as Accountancy Insurance is a wise idea for growing businesses. As your business grows, you will face a variety of different challenges. A comprehensive tax audit will cost a lot of money and will prove to be a serious bottleneck for your company’s growth. However, if you have liability insurance the company will cover the professional fees charged by the audit firm.
Companies such as Accountancy Insurance don’t only offer insurance packages to protect you from tax audits and other investigations and enquiries. They also offer comprehensive Cyber Insurance, Management Liability Insurance and Professional Indemnity packages. Protecting yourself from frivolous claims and lawsuits is within your best interests. Rather than spending a huge sum of money each year on litigation and tax audits, you can instead invest that money into your operations and make your company grow.
Buying an Insurance Plan
When it comes to buying an insurance plan for your company, you will need to consider several important issues. The premium is calculated based on several factors. First of all, your company history will be checked. If your company has been subjected to a series of tax audits and investigations over the years, the premium is likely to be higher. Similarly, your company’s public position also plays a role. The company will give you a tailored quote based on your company’s performance and position in the past. You can compare quotes from different companies before making a decision.