The services of a professional accountant are invaluable, whether you are a business owner or just an individual with complex accounting needs. Unfortunately, not every accountant holds themselves to the high standards you expect. If you have determined that your accountant is making consistent or egregious errors rising to the level of accounting malpractice, it is important that you take immediate action.

Not every accounting error represents negligence. The first thing that you need to know before accusing your accountant of malpractice is the specific elements that you would need to prove. These are:

  • The existence of a professional relationship between you and the client. This means that you cannot charge an accountant who has simply given you bad advice at a dinner party with malpractice. You must have hired the accountant to provide you with their services.
  • A breach of duty occurred representing a failure to use or apply the level of service that another accountant performing similar work would have provided.
  • You suffered some kind of damages or harm, generally interpreted as provable financial losses for which you can be compensated.
  • The accountant’s actions or inactions were the cause of the damages or harm. You must be able to show a relationship between the breach of duty and the harm that you suffered. To prove this you must pass the “but-for” test, meaning “but for the accountant’s action or inaction, the damage would not have occurred.”

If you believe that these four elements are present, you may opt for speaking with your accountant about what happened, or you can turn to an experienced accounting malpractice attorney to determine whether your situation represents an understandable error or whether it represents negligence for which you are eligible to take legal action and be reimbursed.

Compensation for malpractice generally consists of reimbursement for the actual damages that you suffered (such as penalties for late or insufficient taxes), though in some cases the accountant can be required to pay penalties in the form of punitive damages. Determining whether punitive damages are appropriate will often be based on the expert witness testimony provided by another accountant, who will provide a professional opinion on your accountant’s role.

When you hire a professional, you do so with the expectation that they will provide you with high-quality services in exchange for the fees that they charge. Though accounting mistakes are disappointing, they do not always rise to the level of negligence or accounting malpractice. For help assessing whether you are eligible to pursue legal action against your accounting professional, contact us today.