Accounting Malpractice - Accountant Malpractice, Accounting Malpractice Lawsuit

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Accounting Malpractice

Accounting malpractice occurs when an accounting professional does not follow professional standards and deviates from General Accepted Accounting Principles (GAAP; for accountants) or General Accepted Auditing Standards (GAAS; for auditors). If an accountant or auditor is negligent, or violates the rules and guidelines of standard accountant practices (such as the GAAP or GAAS) and causes harm or financial loss to a client, he or she can be held legally responsible. In situations involving accountant malpractice, victims may be able to file an accounting malpractice lawsuit to recover lost money.

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Accountant Malpractice

An example of accounting malpractice is when an accountant gives a client advice and that advice is incorrect. The victim may wind up paying additional expenses or fines due to the incorrect accounting advice.

Some Accounting Malpractice suits include the following:

Accounting Malpractice due to fraud
Accounts Receivable Errors
Certified Accountant Professional (CPA) License Fraud
Failure to Detect Defalcations
Failure to properly audit financial statements
Deviations from GAAP & GAAS Standards
Inventory Errors
Securities Fraud

Accounting and Malpractice

Tax Preparation

According to Michael Lynch and Nicholas C. Lynch, the number of malpractice cases alleging negligent tax advice is increasing. Their article, "Advisers Beware: The Cost of Being Sued Is Going Up" (12/01/07) notes that negligent tax advice is the cause of most malpractice claims filed against CPAs.

Tax preparation malpractice claims include failing to file a client's return on time without applying for an extension and failing to properly complete the client's tax forms.

Audit Accounting Malpractice

Audit claims involve failure on the part of the accountant to detect fraud or failure to advise clients of internal control weaknesses that should have been corrected.

According to AICPA (American Institute of CPAs), more than 35 percent of all audit malpractice claims allege failure to identify, evaluate and report management fraud. Auditors are responsible for performing fraud risk assessments and designing auditing approaches to increase the chances of detecting material fraud. They are also responsible for evaluating the implications when fraud allegations are reported. Failure to perform these duties can result in allegations of accounting malpractice.

Accounting Malpractice Lawsuit

To be successful in an accounting malpractice lawsuit, the plaintiff must establish four elements:

The plaintiff must show that the accountant had a duty to the plaintiff.
The plaintiff must show that the accountant breached that duty.
The plaintiff must show that he or she was injured (including financial harm)
The plaintiff must show that the accountant's breach was the proximate cause of the injury.

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Last updated on Dec-30-10

ACCOUNTING MALPRACTICE ARTICLES AND INTERVIEWS

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New York, NY: A major Accounting Malpractice lawsuit has been filed in the State of New York, and is the first major action to emerge from the failure of the once-Herculean Lehman Brothers bank. While all eyes are on the action and how it all plays out, the lawsuit also comes at a critical time for New York with the ascension of outgoing New York Attorney General Andrew Cuomo to the Governor's mansion [READ MORE]

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