What Accountants Need to Know About Liability Risks in Their Practice
Accountants work in a competitive and constantly changing landscape. As it evolves, so too do the challenges they face in managing risks.
With new regulations and emerging cyber threats alongside stringent professional standards, accountants must stay vigilant. Mitigating liability risks in their practices is one of the most urgent priorities for the sector in 2025, so here’s a look at the key areas of concern this year.
New regulatory risks
The regulatory environment for accountants is changing.
As global standards tighten and local authorities increase expectations, accountants must stay transparent. New laws addressing financial reporting and auditing demand timely documentation and acute regulatory awareness.
Failure to comply can result in penalties or even legal action. For example, with the growing scrutiny of environmental, social and governance (ESG) disclosures, accountants face heightened responsibility for the accuracy of this reporting. This increases liability risk.
Professional indemnity insurance: best practice
Many accountants look to professional indemnity insurance (PII) as a valuable safety net. As liability risks grow, so does the upside of having robust coverage. 2025 represents a good opportunity for accountants to review their PII policies to make sure that they accurately reflect the range of services they provide.
Given the complexity of modern regulations, industry professionals might take comfort from exploring accountants’ insurance options that serve as layers of protection against professional negligence claims and other formal accusations.
Cover may also help mitigate the risk of human error in reporting. Consulting with independent experts, meanwhile, could help accountants avoid loopholes and vulnerabilities in a rapidly changing environment.
Ethical standards and professional conduct
The foundation of an accountant’s reputation lies in their adherence to nationally approved accounting standards.
Clients and regulators alike are demanding greater transparency from financial professionals. Breaches of professional conduct can result in both legal liabilities and lasting career damage.
Accountants must be proactive in maintaining the highest standards. From avoiding conflicts of interest to upholding confidentiality, they should act with integrity and in the best interest of their clients.
The most essential steps in reducing the risk are researching professional codes of conduct and undertaking regular training.
Cyber risks and data protection
Digital threats pose one of the most pressing concerns for accountants.
The protection of sensitive client data is a legal requirement under the General Data Protection Regulation (GDPR) laws in Europe, plus other stipulations in the UK. Data breaches can lead to costly legal claims and loss of client trust.
Accountants must remain vigilant against growing cyber threats, from ransomware to phishing attacks. Implementing strong cybersecurity measures is critical for protecting against these risks. These may include:
- Multi-factor authentication
- Secure data storage
- Regular staff training
- Physical security measures
- Whistleblowing policies
Throughout the accounting sector, liability risks will keep expanding in both complexity and volume. With a proactive approach, practices can be protected from a variety of potential threats.
Accountants must stay informed about new regulations, maintain robust insurance coverage, uphold ethical standards, and safeguard client data.
