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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
      Tax investment cases
      Improper tax advice
      Dishonesty or malfeasance

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

Accounting Malpractice Legal Help

If you or a loved one has suffered damages in this case, please click the link below and your complaint will be sent to a lawyer who may evaluate your claim at no cost or obligation.
Published on Jul-9-10

ACCOUNTING MALPRACTICE LEGAL ARTICLES AND INTERVIEWS

Accounting Malpractice Lawsuit Launched against Giant E&Y Firm
Accounting Malpractice Lawsuit Launched against Giant E&Y Firm
December 31, 2010
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
READ MORE Financial Settlements and Legal News
READ MORE Malpractice Settlements and Legal News

READER COMMENTS

Posted by
New York
on
My accountant failed to pay my property taxes in a timely manner and did not notify me of same, and my property, which was on the market at the time priced at $250K, was bought at a tax auction for $7K.

Posted by
Anonymous
on
My CPA obtained my information for filing for approx 5 years. Despite my numerous contacts,which the majority went unanswered ,he still did not file my return for 2007 for almost 5 yrs. a levy was made against my bank account and that's when he finally admitted he had misplaced my information. Every notice I received from the IRS was either dropped off,faxed etc. to him. He continued to ignore it. My paycheck has been garnished since 2011 and 15% of my SS check is being taken. Starting amount at garnishment was $80+ thousand dollars. I am 68 yrs old,have leukemia and cannot meet my financial obligations without constantly pulling from my 401k. Need to retire because of my illness,but is not possible. Still owe a balance of $40 thousand.+. Retained an attorney in Dec. @ $2500. Got nowhere with IRS. Stated it was totally my responsibility. I feel he needs to be held responsible for malpractice. This is a CPA my husband had used for 25+ years. He just totally put me off for over 5 years. Thought he could be trusted and depended on to do his job.i don't really have the money to retain another attorney to help me. He would not do a written statement because he was afraid I would sue him. This he told to my attorney. At my wits end with this!!!







Posted by
Anonymous
on
Guardianships over incapacitated elders with assets is plagued by fraud. Once an elder is deemed incapacitated, all assets are placed into a guardianship account. (See the 2010, 2011, and 2012 U.S. Government Accountability Office Report on guardianship abuses.) Guardians submit accountings to the probate court, but these are often unmonitored and rubber-stamped by the judge who must handle hundreds of such cases. There is no auditing outside the court of guardianship practices. Families and the elders are not allowed to see where the money goes. In all 50 states documentation shows that elder estates are regularly fleeced. For more info, go to www.facebook.boomersbeware. Requirements to be a guardian in some states are: You need to have a clean record, be 18 or over and that's it-- aside from a 40 hr. training course in guardianship. Professional guardians for profit aren't required to have accounting or finance degrees, and yet they control millions of dollars of other people's money. Meanwhile, the elder in guardianship becomes powerless due to the court's removal of many if not all civil rights. The guardian, with less training than it would take to receive a driver's license, takes over all decisions relating to a vulnerable person's life. Elders are isolated, incarcerated in nursing homes, and worse. Their homes are sold off, and all assets liquidated. I'm wondering if the more egregious cases couldn't be prosecuted on the basis of accounting fraud. Unfortunately, though, the court can sequester all records relating to the guardianship, and guardians have court-sanctioned protection giving them a huge amount of leeway as to their control and privacy when it comes to matters concerning the elder. In Texas, guardians can have "physical possession" of the ward. When one person basically has ownership over another who has lost their civil rights, the results are bound to exploitative.

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