We are entering a period where the risk landscape for accounting and advisory firms is evolving faster than ever. It is not just about technical compliance. It’s about how firm culture, technology, and regulatory/economic dynamics intersect to shape firm liability exposure. These risks can affect everything from a firm’s bottom line to its reputation, making it critical for leaders to understand their exposures and proactively find ways to help mitigate them as part of their 2026 strategic planning.
While there are many risks firms will face in the year ahead, four categories should be at the top of the list:
Risk #1: Audit quality and firm culture
The PCAOB and AICPA are no longer just looking at the quality of an audit—they’re looking at the culture of the firm behind those services. For example, the new PCAOB and AICPA quality management standards push attest firms to rethink how their leadership, tone at the top, and internal processes contribute to risk mitigation and compliance. If an attest firm’s culture tolerates dabbling, shortcuts, and/or a piecemeal approach toward audit risk management, that’s a potential liability risk for the firm.
Risk #2: Deepfake technology and cyber
Deepfake technology is becoming a serious threat. According to a report from Resemble AI, documented financial losses from deepfake-enabled fraud exceeded $200 million in Q1 2025 alone. Instead of phishing emails, staff now receive realistic phone and video messages from “clients” requesting urgent payment. These attacks often target junior staff, remote employees, or firms without a centralized approval process.
Deepfake technology also increases audit risk. For example, an embezzler can use deepfake technology to forge financial documents and/or manipulate the audit trail to dupe an auditor.
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Risk #3: Workforce shifts and generational gaps
The changing workforce in the accounting profession also affects risk. Generational differences directly affect how firms hire, train, and retain new talent. Depending on the firm or the individual employee, remote or hybrid work policies may hinder development, training, and mentoring opportunities. Additionally, if new hires are not being onboarded and trained on the importance of compliance and firm quality control, it is a real vulnerability—one that could eventually lead to competency gaps, errors, and misjudgments.
The ongoing accountant shortage also continues to strain firms, creating the potential for risk as fewer employees are being asked to do more for clients. In its recent 2025 Trends: A Report on Accounting Education, the CPA Exam, and Public Accounting Firms’ Hiring of Recent Graduates, the AICPA does offer a bright spot. While the data continues to show contraction in the supply of accounting graduates, that rate of decline has slowed year over year.
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Risk #4: Economic and regulatory uncertainty
Trade tensions and shifting regulatory/governmental objectives make it that much harder for firms to provide reliable business or compliance advisory services. For example, changes in trade policy can adversely impact prior tax and supply chain optimization strategies, forcing firms to not only stay abreast of such sudden changes but require it to revise prior advice. If a firm misjudges the trade and regulatory environment, it may lead to a significant claim.
Regulatory changes will also continue to affect how firms do business, from the government’s move to stop issuing, and eventually accepting, paper checks to pay equity laws and salary disclosure requirements.
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Finally, economic volatility amplifies accounting and advisory firm risk. When markets tighten, clients scrutinize their professional service providers more aggressively. Investment losses, bankruptcies, and other financial stress often correlate to an increase in both professional liability claim frequency and severity against accounting and advisory firms.
Closing thoughts
Liability risk is no longer just about what you do—it is also about how you lead and adapt. CPA firms that do not evolve their risk management strategies are going to find themselves exposed in ways they might never have anticipated.
This article is provided for general informational purposes only and is not intended to provide individualized business or legal advice.
ABOUT THE AUTHOR:
Stan Sterna, J.D., senior vice president, is the risk control lead for the AICPA Member Insurance Programs. He focuses exclusively on helping accounting professionals mitigate risk through strategic quality control, claim/litigation management advocacy, and risk control consultation to some of the country’s largest accounting firms.
Illustration credit: Maria Stavreva/iStock
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