The Liability of Assuming Responsibility

In many different professions, when you are hired you are handed a job description. For accountants and a few other independent contractors, the clients define the job description. This can create an unexpected liability for the independent contractors. For some responsibilities, the line can be fuzzy, which in turn causes an expectation gap. When this happens, the independent contractor could be liable for not covering this gap, even if it was never communicated.

There are ways to minimize the pitfalls associated with independent contractors. The following are a few steps to follow:

  1. Define the Duties: When writing the engagement letter, clearly define the duties and scope of the services rendered, and be sure to include any limitations on services.
  2. Perform Only Duties Listed: Performing only the duties agreed upon in the engagement letter is critical. If more duties are performed, get an additional letter or addendum to the agreement to define those new duties and limitations on the duties.
  3. Documentation: It is important to keep everything in writing. Any oral conversations should also be communicated through written communication. The communication should note the client’s responsibility for taking the action and the recommendations made. Be sure to date the communications to keep the records clear.
  4. Avoid Overstatements and Titles: When communicating with clients, creating marketing materials, or creating engagement letters, it is important to be clear. Do not imply that certain services will be included if they will not be covered. Clear communication is key. Also do not take on extra titles such as, interim, outsources CFO, or controller. Such titles give an importance that usually is not there.
  5. Request an Overseer: Have the company delegate an overseer, preferably at the executive level that has the time and expertise to oversee the services provided by the independent contractor.
  6. Assuming Responsibilities: Do not assume responsibilities that are not in the agreement letter or contract. Stay firm on responsibilities that are outlined and request a new agreement if more services are needed.
  7. Board Meeting Attendance: If it is mandatory to attend board meetings, try to be first on the agenda, and exit after you are done. Have it noted in the minutes of what you discussed and then the time that you exited. This will keep you from being drawn into responsibilities that are not in your contract.