Is Professional Indemnity insurance mandatory for Australian accountants?

Professional Indemnity (PI) insurance is mandatory for accountants who hold a Public Practice Certificate with bodies like CPA Australia, CA ANZ, or the IPA. If you are an accountant working in-house or in commerce (industry), you generally do not need your own PI policy, as you are covered by your employer. However, all registered Tax and BAS agents must maintain PI cover to comply with TPB regulations.

What is run-off cover and why do retiring accountants need it?

Run-off cover protects you against claims made for professional errors after you have closed your practice or retired from the industry. It is necessary because professional indemnity insurance is 'claims-made' meaning you must have an active policy at the time a claim is lodged even if the work was performed several years prior.

Does accountancy insurance cover the costs of a tax audit for my clients?

No, standard professional indemnity insurance does not typically cover the professional fees of a tax audit, but you can purchase specific Tax Audit Insurance or 'Audit Shield' as an add-on. This cover helps pay for the costs of preparing for and responding to an audit or investigation by the Australian Taxation Office (ATO).

Are sub-contractors and outsourced staff covered by my professional indemnity policy?

No, sub-contractors and outsourced staff are generally not automatically covered under your policy and are typically required to maintain their own professional indemnity insurance. You should verify your policy wording to ensure your business is protected against vicarious liability for work performed on your behalf by third parties.

Does standard accountancy insurance protect against cyber attacks and data loss?

No, a standard business insurance policy for accountants does not usually provide comprehensive protection against cyber attacks or data breaches. Accountants should consider a dedicated Cyber Liability policy to cover costs related to data restoration, client notification and legal penalties following a digital security incident.

What is the minimum level of Professional Indemnity cover required by CA ANZ?

For CA ANZ members with a Certificate of Public Practice, the minimum cover is generally $2 million. Under the Professional Standards Scheme, this limit increases based on the firm's annual fee income. While CPA Australia's scheme caps at $75 million, CA ANZ members should verify their specific tier to ensure their liability is capped under the relevant state or territory legislation.