AICPA’s member insurer to cover BOI work for accounting firms
February 6, 2024
The AICPA's member insurance program underwriter provided reassuring news to at least 25,000 U.S. accounting firms last week when it said its professional liability insurance coverage generally includes client work associated with beneficial ownership information (BOI) reporting.
CNA said in a statement last week that its professional liability policies generally will cover professional services associated with the Corporate Transparency Act, subject to policy terms, conditions, and exclusions.
The BOI reporting requirement is an anti-money laundering initiative enacted through the Corporate Transparency Act, P.L. 116-283, in 2021, mandating that BOI be reported to the Financial Crimes Enforcement Network. The requirement applies to most companies.
Some 25,000 AICPA member firms use the CNA program, said Barry Melancon, CPA, CGMA, the CEO of AICPA & CIMA.
Practitioners have expressed concerns that some BOI work might be considered the unauthorized practice of law. Each individual state bar determines what is the unauthorized practice of law, and none has said that BOI work would constitute the unauthorized practice of law, Melancon said.
In addition, there's "pretty strong evidence that that's probably not going to be the outcome," Melancon said Thursday during the biweekly AICPA Town Hall.
If a state bar later determines that BOI work is the unauthorized practice of law, then CNA said its insurance would consider any work done before that date as covered professional services, the insurer said.
"We wanted it to be clear that from a liability perspective or a professional liability insurance perspective that if you choose to do so, that it's a component part of what a CPA practice might look like, and it should be covered," Melancon said.
As is the case with all its professional services coverage, any activity that is dishonest, fraudulent, criminal, and/or illegal is not covered, CNA said.
Also, any accounting firm that decides to offer BOI assistance to clients will need an engagement letter. The AICPA is working with CNA and Aon, which provides risk solutions to AICPA members, on a template for an engagement letter, which should be available in a few weeks, said Lisa Simpson, CPA, CGMA, AICPA & CIMA's vice president–Firm Services.
More information about BOI reporting is available at AICPA & CIMA's BOI reporting resource center.
[The Tax Advisor]