As a Certified Public Accountant, or CPA, there are various challenges you may face. Becoming a CPA takes a lot of hard work and you’ll advance far in your career, but it also comes with its own set of unique challenges. There’s a fine line between what is the proper amount of information to provide to clients and what is too much or too little. This issue is because rules and regulations are constantly changing in the financial advice industry. CPAs need to carefully follow these rules and guidelines and make sure they’re satisfying all parties involved, including their clients. In relation to all of these regulations, there are a couple of issues that could arise.
Regulations for CPAs
The North American Securities Administrator Association, or NASAA, is a large financial administrator that dictates the rules and regulations for CPAs and other financial advisors or workers. Pretty much every organization in North America that issues financial securities functions or financial advice. The rules NASAA sets relate to regulating the amount of financial advice these organizations can give to clients.
The rules set by NASAA are then enforced by the Financial Industry Regulatory Authority, or FINRA, though they do offer waivers to some workers in the finance industry. One way that NASAA and FINRA attempt to control investment advisors is by requiring them to take the Uniform Investment Adviser Law Examination. The exam covers various aspects of the finance industry. To work, a CPA must take this exam and also follow all of the regulations imposed by the NASAA. If they do not, there may be legal complications.
Another peril that CPAs must avoid is providing insufficient financial advice to clients. If a CPA gives bad advice to a client, or forgets to provide information that might be important, this could result in a malpractice lawsuit against the firm or individual. Sometimes, even when a firm tells a client they’re unclear about the outcome of advice, they still may be sued if the outcome is unfavorable. CPAs must be familiar with all sections and clauses in the rules regarding their advice they can and cannot provide to clients.
It may seem as though there’s no way to win, because if the client is unsatisfied, it’s likely they’ll sue the firm or CPA anyway. While this seems like an impossible scenario, the most CPAs and firms can do is make sure they’re always in compliance with NASAA regulations and have a strong legal team.