People errors – how to alleviate insurers’ concerns

The ongoing talent shortage within the accountancy sector is increasing the workload for employees. In an industry where hybrid and remote working practices have become the norm, firms are facing new challenges arising from inadequate training, development and supervision. Professional indemnity insurers will be looking closely at how firms respond.

Accountants are in short supply

It’s no secret that the UK is in the grip of a talent shortage. The reluctance of many people to return to work is one of the legacies of the Covid-19 pandemic, and the accountancy sector is no exception.

According to data from Hays, more than 60% of those hiring accountancy and finance professionals plan to recruit staff within the next year. This is in turn driving up salaries within the sectors, as firms increasingly compete to attract talent. Accounting and finance salaries rose by 6.5% in 2022, a trend that’s expected to continue.

Others are considering innovative ways to upgrade their employee benefits packages.

But as firms struggle with resourcing, their employees are grappling with an increasingly strenuous workload. This is true of all financial services firms, but other factors have posed a particular issue for accountants, such as the delayed introduction of Making Tax Digital, originally scheduled to go live in 2018. As a result, common bottleneck periods – such as the run-up to tax return deadlines – have become unmanageable for many, leaving accountants increasingly prone to errors, mistakes and omissions.

Remote work – risk of errors on the rise

Errors are not a new threat to firms, but their likelihood is further amplified amid an increase in agile and remote working practices. This, combined with a growing willingness among more experienced employees to change jobs, is raising concerns around the adequacy of training, talent development and supervision of staff.

As the likelihood of individual errors increases, so too does the expectation that accountancy firms will suffer a negligence-related lawsuit. Many firms are already responding to this trend. A growing number are increasingly subcontracting out error-prone work, such as audits. Others are withdrawing from high-risk work altogether.

Professional indemnity insurers are similarly alive to this trend, with underwriters now demonstrating a keen interest in employee workloads and their competencies when it comes to setting insurance premiums. Likewise, as disengagement impacts firms’ ability to retain staff and attract quality people, workforce and stability and consistent approach to wellbeing rank high among insurers’ concerns.

Alleviating insurers’ concerns

There is little suggestion of either an approaching end to the talent shortage, or the sudden return of hybrid and remote workers to the office. With these trends set to continue, firms must seek out other means to address the rising risk of errors and improve their workplace culture.

Measures to mitigate the risk of errors include:

• ensuring work is allocated fairly among employees, with limits placed on the number of files that any single individual will work on each week
• reducing workloads in cases where work is particularly complex to prevent employees becoming overworked and preserve quality of output
• taking steps to keep employees engaged, such as setting achievable goals as part of employees’ daily work and organising team events and activities to build rapport
• ensuring employees receive praise and recognition for demonstrating good work and commitment, such as ‘employee of the month’ or similar programmes
• offering mentoring or peer-to-peer learning opportunities to maintain levels of competence and prevent misunderstandings, particularly for new employees
• encouraging continuous learning and other forms of personal development, including those outside of the workplace
• where flexible or hybrid working is required, ensure employees are provided with the necessary tools and equipment to carry out their work comfortably and effectively
• demonstrating a strong understanding of mental wellbeing, including providing employees with appropriate forums for discussing issues, and sharing emotions and vulnerabilities
• being committed to equality, diversity, and inclusion, including fair pay, and ensuring all employees have access to opportunities for internal career progression.

Lucie Gosling-Myers – client development manager, Lockton People Solutions

You can find out more about how to protect your practice and your clients against cyber-attacks by joining our free webinar with Lockton on 19 June at 12.30pm.

If you have any questions about professional indemnity insurance, please contact your Lockton Account Manager for further advice or email ACCAaccountants@uk.lockton.com.

Lockton is ACCA’s recommended broker for professional indemnity insurance