Risk resolutions for 2025: Remember to put your No. 1 client first

Risk management, in the words of Sarah Ference, CPA, doesn’t have to be overly complicated or time consuming. “It’s really a mindset,” said Ference, an author of the JofA‘s Professional Liability Spotlight column and the guest on this week’s episode of the JofA podcast.

Ference shares several risk management maxims that have resonated with her – ones that are the focus of the January column, Risk Management Mantras to Add to Your Daily Practice.

In addition, Ference details the topics in some previous Professional Liability Spotlights:

• October: 10 Tips to Help Avoid Wire Fraud Scams.
• November: Missed Due Dates: Diligence and The Lurking Danger.
• December: How to Not Lose Sleep Over NOCLAR.

What you’ll learn from this episode:

• Some of the risk management mantras that stand out to Ference.
• The difference between being friendly and objective with clients.
• The answer CPAs should give to the question “Who’s your most important client?”
• Why Ference says that being a natural helper can get in the way of a firm’s best interests.
• Explanation of the mantras “trust your gut” and “take the high road.”
• Highlights of other recent JofA Professional Liability Spotlight columns.

Play the episode below or read the edited transcript:

Transcript

Neil Amato: Hello, listeners. This is Neil Amato with the Journal of Accountancy. You’re listening to the JofA podcast. It is one of our first episodes of 2025, and we’re happy to welcome Sarah Ference as our guest. Sarah is a CPA. She is a risk control director at CNA, which is the underwriter of the Professional Liability Insurance Program with the AICPA.

Readers will recognize her name as an author of the JofA’s Professional Liability Spotlight column. We’re going to discuss some of those column topics today, including the January topic that is, suitably, resolution-focused. Sarah, first, thank you for being on the JofA podcast.

Sarah Ference: My pleasure, Neil, thank you so much for having me.

Amato: We’re glad to have you on. As I mentioned, in the January Journal of Accountancy, you have written an article with the headline, “Risk Management Mantras to Add to Your Daily Practice.” Whether they’re mantras, whether they’re resolutions, why are these overall you think important for CPAs and their firms?

Ference: Neil, we talk to CPAs every day about situations they’re facing at their firms, whether it be a difficult client or an uncomfortable feeling or something that just seems off, or even a seemingly simple request from a client or a third party. In these conversations, we find ourselves repeating certain catchphrases or sayings quite frequently.

To kick off the new year, we thought it would be fun to summarize and share some of our favorite sayings and catchphrases and hopefully a couple will resonate with our readers and stick in the back of their minds as they’re going about their day-to-day delivery of services to clients and decision-making.

Amato: Obviously, you don’t want to diminish any of them, but are there one or two you’d like to highlight first?

Ference: Sure. There are a couple of my favorites that are in this list, and I will start by saying that while they are my favorites, they are not my inventions. These two are things that we actually heard from firms that we insure, that we work with, as part of our day-to-day delivery of risk management services to the CPA firms that we insure.

My first favorite, and this was from, gosh, now, it’s been one of my favorites for several years, but he used to say, “They’re called clients, not friends for a reason, Sarah.” The reason that one stuck with me is that while client service is one of the fundamental aspects of our professions, and it’s great to have wonderful relationships with clients. I still remember with fondness, a number of relationships that I had with my clients when I was in practice is really friendships beyond the service delivery aspect of it. But always keeping in mind that while we are friendly with our clients, they are not our friends. They are still our clients, and making sure you’re treating that relationship with the same level of professionalism, with objectivity that you would with any other business relationship.

While it’s important to be friendly, it’s still important to maintain that objective mindset. If you keep that objective mindset, then you’re able to make decisions that are better for you and your firm and maybe the right decisions, which is not necessarily what the client wants all the time.

Then the second one that again came to me from a firm that we work with. He said, “Don’t forget about your No. 1 client, which is your firm.” I think if you asked many CPAs who their most important client was, they might say their largest, they might say their favorite. They might say the one that has been their longest client. But they probably would not say their own firm.

I thought this was a really good, just a different understanding and change in mindset. But I think that if you keep your firm in mind when you’re making decisions, and that firm includes not only the firm, but your colleagues, those who work for you, those that you work for and you work with, if you keep the interests of that firm and those people in mind, then you’re likely going to make the better decision for your firm from a risk management standpoint and usually a profitability and clients and satisfaction standpoint, too.

If you take care of your firm, you take care of the people in that firm, then chances are success will follow and client satisfaction will follow, and quality service delivery will follow. The keeping your No. 1 client, your firm, in mind as you’re going about making day-to-day decisions, I thought it was just a really good phrase that I appreciated that we wanted to share with our readers.

Amato: That’s a good start. Again, those first two, they’re called clients, not friends for a reason and don’t forget about No. 1 client, your firm. We will link to this Professional Liability Spotlight column in the show notes for the episode. I want to go back to the first one you said and you touched on this. They’re called clients, not friends, for a reason. When you do have that longstanding relationship with a client, it is easy to get friendly with them. I wondered if you could explore that a little bit more. Is that one that firms or individuals working with clients can have trouble with?

Ference: I certainly think so because when it comes to making a difficult decision about a client relationship, whether it’s a client that’s just no longer a fit for the firm or a client that has evolved such that the firm can’t meet its needs or vice versa, it makes it difficult to, or if there is bad news that you need to deliver to the client, whether it’s a position that they want to take on a tax return that you’re not comfortable with and you won’t be able to do that. Whether it’s something about maybe their business that you need to advise them on, that maybe it’s just not something that’s not going to sit well or maybe they owe you money and you need to get on them to pay you on time or you’re going to suspend services. It makes it difficult to have those necessary but uncomfortable conversations with someone you consider a friend.

If you’re keeping it at an arm’s-length professional relationship, then it’s a little bit easier to do that. But client service and getting to know our clients is one of the hallmarks of our profession, and quite frankly, one of the more enjoyable ones, too, because we’re natural helpers as CPAs, and we want to assist our clients with their needs and support them. And that is absolutely what we should do, but as long as we’re keeping it professional.

Amato: I’m going to ask you about a couple others on the list that stood out to me. Tell me a little more about what “go with your gut” means.

Ference: This is one, and I delivered audit services for most of my career at my firm. CPAs have pretty good instincts when something just, doesn’t seem right, whether it’s a client or a situation, or if you’re an auditor. If you’re getting an explanation from a client that’s just not jiving, you feel something in your gut or the hairs on the back of your neck or whatever phrase you want to use – to not ignore that feeling because it’s generally right.

If you ignore that feeling or try to explain it away or sweep it under the rug, then, you know, if there’s a dispute or a claim or any other kind of difficult thing that transpires, nine times out of 10, when we talk to firms about this, they say, you know what? I knew something was wrong, ignored that, I didn’t do anything, or I didn’t terminate the client, or I proceeded anyway, and gosh, I wish I wouldn’t have. The trust your gut is really just listening to your instincts and at least exploring that and not ignoring it.

Amato: How about this one? Take the high road. What are some instances where take the high road comes into play?

Ference: Take the high road comes when you just have an angry client, an angry client because they want you to do something that you don’t want to or you’ve decided to terminate the client relationship and they’re angry at you for doing so, or you decide that you can’t issue this audit report because you haven’t gathered enough evidence to allow you to do so in accordance with the standards.

It could be really anything that makes a client upset. And that client might lash out. They might call you names. They might, you know, take their anger and their hurt and their frustration and channel that into words whether it’s in writing or verbally to you. A lot of people will have the gut reaction to respond in kind. That’s never a good idea. It doesn’t generally diffuse tension. It doesn’t help the situation certainly and generally makes it worse. Sometimes the best thing to say is nothing at all. To take that high road by sticking to whatever message that you wanted to deliver, whether it’s a termination or anything else in a calm and rational and professional manner, and letting the client have their feelings and then moving on.

Amato: I think that’s a good lesson in a lot of things, not just CPA-client relationships.

Ference: Yes, I think so, whether it’s on the road in traffic or in a crowded area or when you’re giving clients bad news.

Amato: Exactly. That’s hitting the high notes of the January Professional Liability Spotlight column. Are there some other recent Pro Li, as we sometimes call it, content highlights you’d like to bring up?

Ference: Sure. I’ll just recap the fourth quarter of 2024 articles. We’ve been writing this column now since 2013, and it’s one of our favorite things to do. I always love reading what we’ve come up with and ideas that we share, and hopefully there are readers that get a lot out of it, too.

The October article from 2024 talked about 10 tips to help avoid wire fraud scams. We’re seeing some of our wire fraud issues occur more and more, and there are some simple steps that firms can do to put some controls in place at the firm to hopefully help them avoid those kinds of scams, whether it be related to client money that they might be handling or even their own money.

Another one, from the November issue, was about missed due dates when it comes to tax filing obligations. We do see an increase in claims related to a missed due date, whether it’s, I’ve missed it. The client was penalized, and now the penalty is coming, the client is blaming me for that penalty. The IRS is abating less and less, and we’re seeing some claims increase in this area. It’s not a good trend, and so the Journal of Accountancy article for November, called Missed Due Dates: Diligence and The Lurking Danger, talks about things that firms can do to address the tendency to miss due dates.

Then the December article is about noncompliance with laws and regulations and how firms can get sued for not telling their clients about instances of suspected noncompliance with laws and regulations [NOCLAR] and how that might turn into a claim. The December article just offers some tips of what firms can do when they encounter suspected NOCLAR.

Amato: Yes, wire fraud, missed due dates, and NOCLAR. That’s the quick summary of the quarter that was at the end of 2024. Sarah, again, we appreciate you being on. Is there anything you’d like to add in closing?

Ference: I think in closing, I will say that risk management is not difficult and it’s not as complex as maybe we make it out to be sometimes or as time consuming. It’s really a mindset, and risk management and you’ll notice I said risk management, which is not avoidance or anything like that, it’s really just understanding and responding to risks that exist in your business, in your practice.

If you keep these mantras at the top of your mind as you go about your day-to-day delivery of service and decision-making, that will help you employ and practice a risk management mindset, which will not only help you, will help your firm, and ultimately help you deliver outstanding service to your clients.

Amato: Sarah Ference, thank you very much.

Ference: Thanks, Neil.

— To comment on this episode or to suggest an idea for another episode, contact Neil Amato at Neil.Amato@aicpa-cima.com.

Continental Casualty Company, one of the CNA insurance companies, is the underwriter of the AICPA Professional Liability Insurance Program. Aon Insurance Services, the National Program Administrator for the AICPA Professional Liability Program, is available at 800-221-3023 or visit cpai.com.

This podcast episode provides information, rather than advice or opinion. It is accurate to the best of the speaker’s knowledge as of the publication date. This podcast episode should not be viewed as a substitute for recommendations of a retained professional. Such consultation is recommended in applying this material in any particular factual situations.

Examples are for illustrative purposes only and not intended to establish any standards of care, serve as legal advice, or acknowledge any given factual situation is covered under any CNA insurance policy. The relevant insurance policy provides actual terms, coverages, amounts, conditions, and exclusions for an insured. All products and services may not be available in all states and may be subject to change without notice.