Aon | Professional Services Practice
Accountants’ Liability Risk: Global Trends and Issues – Summary Highlights
March 2024
Professional Services Practice at Aon’s Risk Management Information team’s annual Accountants’ Liability Risk: Global Trends and Issues provides insights into current global trends and risk issues facing the accounting industry.
Key Takeaways
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The risk landscape facing professional service firms features many interconnected economic, geopolitical, environmental and social threats, creating uncertainty for the firms and demanding resiliency and adaptability. Major events include increased international and civil conflict, adding to a fractured world and heightening risks faced by accounting firms. Rapid technological advancements, notably in generative artificial intelligence (AI), continued to disrupt the firms’ operating and business models, with questions arising around the economic and social impacts.
Against this challenging background, accounting firms are also operating in a rapidly evolving and complex environment characterized by expanding client demands, more rigorous regulatory oversight, a high degree of public scrutiny, new workforce challenges and a host of traditional risks. In response, firms are adapting and transforming.
Current observations of note in the risk environment include:
Regulators expanded enforcement and oversight in 2023 with increased scrutiny of ethical lapses. Suspensions against audit firms and individuals were noted in several jurisdictions. Cross-border enforcement remained strong.
Professional service firm reputation is impacted in several ways, including large litigation against firms, scrutiny from governments and regulators and the sometimes retrospective criticism of “risky clients”, for example around crypto and opioids. Leaks of information, whether the result of cyber events or human error, were drivers of reputational incidents in 2023.
Cyber attacks and data breaches remain a top concern as biometric data risks drew increased attention and ransomware risk proliferated in 2023. An agreement to ease the transatlantic (EU to U.S.) flow of data was well received.
The global challenge of securing the right talent for current growth opportunities continues for the firms, although tightened budgets resulted in layoffs in some business lines. The talent shortages have been addressed by the firms with adaptations to the rapidly changing market. 2023 included a revisiting of hybrid working among the firms and financial institutions, with louder calls for a return to the office persisting in early 2024.
High profile matters involved accounting firms in the U.S. and Ex-US. Events in the banking and crypto sectors drove litigation, especially at the beginning of the year, while ESG and data privacy matters attracted attention. Many major cases were fueled by litigation funders, as some linked litigation funding with the social inflation of damage awards. Many lawsuits involved the Illinois Biometric Information Privacy Act (BIPA).
A variety of geopolitical challenges in various jurisdictions, including armed conflicts and threats to already slowed supply chains, have complicated the risk landscape for the firms, which have proved adaptable and resilient. Demand for geopolitical risk consulting grew in 2023.
Rapidly evolving generative AI tools presented risks and opportunities. Firms have been making significant investments in AI, emphasizing greater AI and tech-literacy for new recruits and existing staff, and partnering with big tech companies to leverage large language models, as firms enhance automation and augment their capabilities in audit and other areas. The firms have also displayed interest in other novel technology such as quantum computing.
The wide range of factors that shape the risk landscape for accounting firms require continuous monitoring. Aon will provide ongoing analysis of significant developments.
Contact
The Professional Services Practice at Aon values your feedback. To discuss any of the topics raised in this article, please contact Audrey Jenner , Daniel Hacikyaner or Rona E. Davis.
Audrey Jenner
Vice President and Director
Montreal
Vice President and Director
Montreal
Rona E. Davis
Senior Vice President and Executive Director
Montreal