Professional Liability Insurance Policy

Description: Updated; 2nd Release

Originated: CPA New Brunswick

Reviewed: CPA New Brunswick Staff  

Approved: CPA New Brunswick Board; November 18th, 2016

To download a copy of the Professional Liability Insurance policy, please click HERE.

Every Firm or Member, including a professional corporation, and such other persons as may be designated in the Policies, engaged in Public Practice or in providing accounting services to the public shall maintain professional liability insurance coverage in accordance with CPA New Brunswick By-Law 22 and in the amounts determined by the Board from time to time.

DEFINITIONS

Firm means “a sole practitioner or proprietorship, a partnership or a corporation”.

Public Practice means “those tasks, services, and functions, as may be prescribed, performed by a CPA, and offered to or provided to the public” whether on a full-time or part-time basis to members of the public, alone or in partnership with others, in respect of any one or more of the following:

•    performing an audit engagement and issuing an auditor’s report;
•    performing any other assurance engagement and issuing an assurance report;
•    a compilation, including a compilation of a financial forecast or projection, prepared while performing an external engagement service and the notice to reader communication is required as set out in the compilation engagement section(s) of the CPA Canada Handbook – Assurance;
•    accounting, insofar as it involves analysis, advice and interpretation in an expert capacity, but excluding record keeping; and ;
•    taxation, insofar as it involves advice and counseling in an expert capacity, but excluding mechanical processing of returns”.


Practice Leader means “any Member with the authority on behalf of a Firm to sign or issue an assurance report, audit report or compilation engagement communication or to issue an opinion or to provide advice or interpretation with regard to financial reporting and other regulated services including but not limited to taxation”.

Member means “a Chartered Professional Accountant and any person whose name is entered in the register, specialists register or in any of the rosters of CPA New Brunswick”.

COMPLETION REQUIREMENTS

The professional liability insurance shall be placed with an insurer Licenced to do business in Canada, and such insurance contracts should include an endorsement requiring the insurer to advise CPA New Brunswick when the policy is cancelled or not renewed or if there are any other changes to the policy. Coverage shall respect all the requirements below.

MINIMUM PROFESSIONAL LIABILITY INSURANCE REQUIREMENTS

Effective with all new policies or renewals of existing policies taking effect after September 1, 2014, professional liability insurance coverage shall be maintained pursuant to By-Law 22 in an amount at least equal to:

  • $1,000,000 per occurrence, where one Practice Leader is engaged or employed in Public Practice;
  • $1,500,000 per occurrence, where two or three Practice Leaders are engaged or employed in Public Practice in the same Firm; or
  • $2,000,000 per occurrence, where four or more Practice Leaders are engaged or employed in Public Practice in the same Firm.

In the event of a withdrawal, merger, dissolution or cessation of the practice of public accounting (the “Event”) of a Member, Professional Corporation or the Firm who at the time was required to maintain professional liability insurance, the professional liability insurance that was required to be carried shall continue to be maintained for a period of at least six years following the Event to cover actions or omissions occurring prior to the Event.   

The professional liability insurance requirements in this section are subject to the commercial availability of such insurance to members and registered firms engaged in Public Practice. The insurance will be considered commercially available if CPA Professional Liability Plan Inc. is able to provide it.

SUCCESSION REQUIREMENTS

Where successor Members or Members in charge of successor firms have arranged to assume responsibility for maintaining such insurance as required above, such successor Members or Members in charge of such successor firms shall be required to provide satisfactory proof annually that the required coverage is in effect respecting the predecessor.

NEW FIRMS AND PROFESSIONAL CORPORATIONS

For newly registered Firms commencing Public Practice in New Brunswick after September 1st, 2014, professional liability insurance must be obtained prior to the commencement of the Public Practice activities and satisfactory proof of coverage must be provided to the Registrar within two months of such commencement.

COMPLETION REPORTING REQUIREMENTS

According to By-Law 22.03 on or before July 31st of every year, every Firm shall, unless otherwise exempted, submit to the Registrar or to such other person as may be designated from time to time by the Board, a declaration in the form required by the Board with a certificate from the insurer, setting out the following:

•    That the insurance required by the completion requirements above is in effect;
•    The policy terms and coverage limits including effective date of the insurance and the date on which the insurance ceases to be in effect;
•    The name and address of the insurer; and
•    The name of all Members covered by the insurance policy.

Any change to the information set out in the certificate shall be submitted by each Firm to the Registrar, or such person as may be designated within 30 days of such change (By-Law 22.04) or upon:

•    the withdrawal of a Practice Leader, Member employee, or Candidate of a Firm; or
•    the merger, dissolution or cessation of practice of a Firm.

EXEMPTION FROM REQUIREMENTS

The Office of the Auditor General of New Brunswick and every Member therein employed in
carrying out the responsibilities of that office shall be exempt from the requirements of this Policy.

Any Firm may apply to the Registrar of CPA New Brunswick to be exempted from the requirement to carry professional liability insurance where special circumstances exist. The Registrar shall hear the application and determine if an exemption shall be granted.

NON-COMPLIANCE WITH PROFESSIONAL LIABILITY INSURANCE REQUIREMENTS

In the event of non-compliance, such as:

•    A Firm has not provided the certificate required under this Policy; or
•    A Firm's insurance coverage has been cancelled/not renewed or has been reduced below the minimum required level; or
•    A Firm has failed to produce a policy or other requested documentation in accordance with this Policy,

the following steps will be followed:

•    A notice of non-compliance will be sent advising the Firm that all rights and privileges of membership of the firm in CPA New Brunswick shall be suspended unless within thirty days of notification of non-compliance, the breach has been remedied. The notice would indicate the effective date of suspension and the ramifications of such suspension. The notice will also advise the Firm of the deadline to become compliant;
•    In the event that the Firm who received the notice of non-compliance fails to provide satisfactory proof of the required insurance coverage within 30 days after the date of notice as mentioned in the section above, a suspension letter will be sent to the Firm which describes the ramifications of being suspended and what needs to be done to be reinstated. The Firm shall be suspended from the Register.
•    Each Firm whose rights and privileges have been suspended shall be reinstated to the Roster effective the date upon which satisfactory proof of the required coverage, together with the reinstatement fee determined by the Board, are received by CPA New Brunswick;
•    In the event that the rights and privileges that have been suspended remain suspended for a period of thirty days, the rights and privileges of such Firm shall be terminated.

•    Any Firm whose registration to the Roster has been terminated may apply to the Registrar to be readmitted to the Roster of CPA New Brunswick upon:
(a)    making a written application in the form required by the Board;
(b)    providing satisfactory proof of the required insurance coverage; and
(c)    remitting the required readmission and reinstatement fees.

•    The Registrar shall notify in writing all Members of the name of any Firm whose permit has been suspended.  Furthermore a notice of such suspension should be posted in regional newspapers where the member had offices.