A staff accountant at a twelve-person firm asks her research tool whether a client can deduct home office expenses under a provision that sounds plausible, gets a confident answer with a code section attached, and sends it along. The section is real. It says something else entirely. Nobody catches it until the client's new accountant flags it three months later.
That is not a hypothetical. It is showing up in E&O conversations across the profession. An AI tool does not know when it is wrong. It produces the answer that reads most convincingly, and confidence has nothing to do with accuracy.
Small and mid-sized firms carry more of this risk than their size would suggest. A large firm has three reviewers between a draft and a client. A five or ten person firm often has one, and that person is buried during busy season. The gap between the AI said so and a human confirmed it is exactly where mistakes reach clients.
Treat every AI-generated answer the way you would treat work from a first-year hire: often right, never final. Before a citation, a number, or a position goes to a client, someone traces the code section back to its actual text and checks the date, reads the section, and confirms its applicability and accuracy. That is a ten-minute habit, not a system overhaul, and it catches nearly everything that would otherwise slip through.
Write it down when you do it. If a position gets challenged later, we reviewed this needs to be a record, not a memory. A dated note showing who checked the source and what they found is the difference between a firm that used a tool carefully and a firm that has to explain itself to a malpractice carrier.
Call your E&O carrier before they call you. Ask whether your policy covers an error that started with an AI tool, whether the firm needs to disclose which tools it uses, and whether coverage assumes a review process you do not actually have in writing. Some carriers are already asking these questions at renewal, and a firm with a clear answer is negotiating from a completely different position than one caught guessing.
Build the steps into your standard operating procedures. After seeking the recommendation from your E&O carrier, and maybe even your attorney, look at making sure that things like WISP documents, engagement letters, and SOPs for documenting review are all updated to reflect the expectations.
None of this means slowing down. Truthfully, firms that are not implementing AI tools are falling behind those that are, It means building one checkpoint into a workflow that otherwise runs faster than it used to, so the speed does not cost you the thing that actually protects the client, and the firm, when something goes wrong.
Dr. Christine Gervais is a licensed CPA, using her skills to help businesses grow and achieve their fullest potential. Christine has a Master’s degree in accounting from Southern New Hampshire University in addition to holding her CPA license for over a decade. Notably, Christine is a nationally recognized speaker providing education to other CPAs on how to best serve clients as well as instruction on a wide variety of topics for business owners on how to maximize success. Christine prides herself on the value she can bring to clients with her extensive tax knowledge and provides strategic, forward-thinking financial strategies to help clients grow. When not behind her desk, you can find Christine spending quality time with her daughter and stepson or tending to the family’s excessively loved farm animals.
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