“Duty of care” is a legal term that is used in cases involving negligence. It refers to the expectation that individuals or entities will act in the same manner as a reasonably prudent person in their position would, and it can apply to the way that a person maintains their property, the way that a physician treats their patient, and the way that a corporation’s officers protect consumers or its board protects shareholders. At its most basic it refers to the responsibility to act in a way that protects others from harm, and it can be applied in many different circumstances, including in the way that an accountant manages their clients’ financial records and tax returns.

When it comes to an accountant’s duty of care, it is fair and reasonable for a client to expect that a professional that they hire will render services that meet professional standards. Though legitimate mistakes can be made, there is a difference between simple errors and oversights, lack of action, or carelessness that results in financial or professional damage. The latter is considered malpractice, and if proven in court can result in a jury awarding compensation to the wronged party.

When an accountant is careless in its preparation of financial documents or tax returns, it can result in significant harm. Examples include:

  • Clients being assessed penalties, interest, fines, or additional taxes as a result of inaccurate tax advice.
  • Clients being assessed additional taxes or a reduction in their refund as a result of failure to advise of tax-minimizing strategies.
  • Clients being penalized or taxed after an audit as a result of an accountant having improperly kept or reported their financial records.
  • Clients suffering financial harm as a result of inaccurate advice regarding business restructuring, retirement plans, and other business-related requirements.
  • Failing to properly prepare or file tax returns or filing them late.

In addition to the duty of care that accountants have to their clients, they also have some responsibility to third parties that may rely upon the financial information that they provided for their clients’ use.

If you are facing financial implications as a result of carelessness on the part of your accountant, you may have a right to pursue legal action for accounting malpractice. For more information, contact us today to set up an appointment.