Accounting is a complex process. From recording financial transactions to analyzing the impact of a business’ economic decisions, accounting requires highly specific expertise and understanding of what is being reported, as well as associated laws. It’s for this reason that so many businesses and individuals rely on professionals for accounting services. Legal action needs to be taken when those professionals are negligent or fraudulent in their conduct.
When an accountant or accounting firm’s misconduct leads to financial harm or damages to their client, it is known as accounting malpractice. There are several different types of accounting malpractice claims that can be filed. The most common include:
• Negligent errors or omissions: Accountants need to be exacting in their recording and reporting of information. When critical pieces of information are omitted from tax returns or financial documents, it can lead to a client’s financial reporting failing to accurately reflect their economic health or their business decisions being based on faulty information.
• Failure to detect misconduct: Businesses rely on accountants to detect discrepancies that suggest or demonstrate fraud or other irregularities. A failure to do so reflects a lack of diligence or care and can lead to significant losses.
• Incorrect or inadequate tax advice: Tax advice is among the most important services that accountants provide. When an accountant falls short or provides incorrect information, it can result in their clients facing significant legal and financial trouble, including audits, fines, and penalties.
• Breach of fiduciary duty: Fiduciary duty refers to a requirement of acting in an entity’s best interests. When it comes to accountants’ fiduciary duty, failure to act on behalf of a client in a way that puts the client’s needs first can lead to financial losses and risk.
• Conflict of interest: Accountants are required to act objectively. If they are unable to do so because of an unreported conflict of interest that leads to advice or reporting detrimental to the client, it can cause financial harm.
• Failure to adhere to professional standards: Accountants are required to comply with what is known as GAAP, or Generally Accepted Accounting Principles. If they fail to follow these well-established professional guidelines, they can be held responsible for that failure.
Accounting malpractice can significantly damage a business or individual’s financial health and reputation. When you suspect that your accountant or accounting firm has acted negligently, you may be eligible to pursue a lawsuit that results in compensation. For more information on how our experienced attorneys can help, contact us to set up a time for us to meet.