When you turn to a professional accountant for tax or business consulting, there can be serious consequences when this work hasn’t been done properly. Accountants are held to certain standards, and when they don’t meet those standards, their mistakes can cause significant financial losses.
You relied on your accountant for certain essential services. You also depended on their advice and insight in making high-stakes business decisions. So what happens when your accounting firm doesn’t adequately do its job?
You fight to try to hold them accountable with a skilled accounting malpractice attorney. For your free case evaluation, call us at 1-866-900-7078.
Accounting Malpractice: A Definition
Your accountant or accounting firm has a duty to perform work in a manner which satisfies industry standards, rules, and guidelines. Failure to fulfill these duties may be malpractice, and can result in harm to both individuals (and their families) and companies, including a company’s shareholders or partners.
Accounting malpractice examples include:
- Improper auditing, review, or compilation of financial statements
- Failing to identify weak points in a client’s safeguards and controls
- Providing inaccurate business or tax planning guidance
- Errors related to tax preparation or filing returns
- Providing erroneous or misleading advice regarding accounting matters
- Failing to discover employee embezzlement
- Inventory errors
Have You Heard of GAAP and GAAS?
Professional accountants tend to abide by Generally Accepted Accounting Principles (GAAP) and Generally Accepted Auditing Standards (GAAS), which are established by governing organizations. The failure of an accountant to abide by these standards, resulting in financial loss to the client, may be the basis for a negligence claim. Your attorney may begin their investigation by examining whether your accountant complied with these standards.
Can I Sue My Accountant for Malpractice?
Suing an accountant for malpractice can be done with our team of experienced litigation lawyers. To bring a successful claim for professional malpractice against an accounting defendant, you must be able to show four things:
- Your accountant owed you a duty to meet at least minimum standards of care for the profession. Those duties are derived from standards, such as those set by GAAP and GAAS.
- Your accountant breached their duty because they didn’t meet generally accepted professional standards consistent with those employed by similarly qualified accountants in the community. For example, an accountant may have:
- Made tax return errors or given incorrect tax advice
- Failed to recommend an audit
- Failed to detect embezzlement or fraud during an audit
- Prepared inaccurate business reports or manipulated financial statements
- Inaccurately evaluated a financial transaction or statement
- Kept poor financial records
- Committed inventory, accounts payable, or accounts receivable errors
- The breach resulted in financial losses to you. Even if your accountant was negligent, but you caught the mistake and corrected it at the last minute, there’s nothing to recover from them.
- Your financial losses are directly related to the breach. You cannot collect based on speculative damages. If the financial losses you sustained can be attributed directly to the accountant’s breach of duty, however, you may be entitled to compensation.
Examples of Accounting Malpractice Lawsuit Cases
Accounting malpractice occurs more often than you may expect. One of our attorneys successfully fought a “Big Four” accounting firm over malpractice relating to losses in the millions that the firm should have discovered, which resulted in a significant settlement.1 In another case, our client settled its accounting malpractice case against a national accounting firm for $3.7 million.1 We argued that the firm had been negligent in fulfilling its professional responsibilities. Whether accounting firms are small or large and national in scope, they can still be sued for their negligence.
Call-out box: Although not required, most accountants have malpractice insurance. For this reason, you’ll likely be seeking compensation through insurance company adjusters, and not suing the negligent accountant or firm directly.
What Damages for Accounting Malpractice Can I Collect?
When considering whether to file a malpractice lawsuit against a public accounting firm, you’ll look to be made whole for the injury you suffered. What does that mean exactly? It means that your damages for accounting malpractice should restore you to where you would have been if not for the negligent behavior of the accountant you relied on.
Your accounting malpractice attorney can help you seek compensation for financial losses directly related to your accountant’s negligence. Potential damages will be specific to the losses of your unique case, and proving the direct relation of your damages to the accountant’s malpractice can be the most challenging part of the case.
Call-out box: It doesn’t always take a lawsuit for the outcome you seek. Simply hiring a lawyer to alert the accounting firm to their error can spur a resolution.
When Should I Hire an Accounting Malpractice Lawyer?
When you suspect something is wrong, get your case evaluated by an attorney. Your accounting malpractice complaint should be taken seriously, and an accounting malpractice lawyer tells them you mean business.
Why should you act quickly? Two reasons:
- You have a limited time in which to act, and the clock can tick without you even realizing it. Contact an attorney as soon as you become aware that your accountant may have been negligent. An attorney can help you calculate your remaining time and get started immediately on building your case.
- Our attorneys work on a contingency fee basis. What that means is that we spend our money to build your case and only collect an attorney’s fee if we win.2 Your attorney can help you make tough decisions and can be a source of strength for you immediately as you deal with the fallout from your accountant’s negligence.
Note: At our firm, we offer the contingency fee structure2 but will also consider alternatives such as hourly fees, set fees, or a combination of all of them.
Did You Know? We recently invested more than $13 million to pursue justice in just one case.
Is the Law Offices of James Scott Farrin Right for Me?
Choosing someone to fight for you when your financial future may be at stake is a monumental decision. Our trial attorneys are frequently in the courtroom, and are prepared to take your case wherever it needs to go to pursue justice. When litigation threats aren’t idle, your leverage can be significant.
Our litigators can forcefully tackle any challenge, including:
- A case of daunting scope: The size of the case won’t intimidate us. One of our attorneys has been counsel for 220,000 people in a class action lawsuit.
- A case with formidable stakes: The high stakes of a case won’t intimidate us. We have achieved recoveries for clients of at least $1 million 10 times in the last few years.1
- A case against any adversary: Who’s on the other side won’t intimidate us. We’re ready to take on any person, business, entity, or government.
Read More: Our Record-Setting $2.1 Million Jury Verdict1
A Legendary Trial Attorney Leads Our Team
Clients, lawyers, and judges know Hoyt Tessener, the head of our litigation team, for his confidence, his dedication, and his meticulous preparation before each case. Hoyt has brought over 100 cases in courts throughout North Carolina, with numerous verdicts and awards of $1 million or more.1
Hoyt has some remarkable credentials. Among them: He was named to the “Super Lawyers” list from Super Lawyers magazine every year from 2006 through 2021.3 In 2016, he was selected as “Lawyer of the Year” for product liability litigation by Best Lawyers in America.3 He holds an AV “Preeminent” rating from Martindale-Hubbell. He’s also a noted law professor, is admitted to practice before the U.S. Supreme Court, and served as Chairman of the Litigation Section for the North Carolina Bar Association.
Hoyt hand-picked our team of trial attorneys, each of whom have their own remarkable credentials. They have combined for hundreds of trial verdicts in their accomplished careers.
Ready to fight back against accounting malpractice? Claim your free case evaluation! Call 1-866-900-7078 to speak to someone from our team right now, or chat with a live person by clicking the icon below. The clock is ticking. Act now to tell them you mean business for the harm they’ve caused.
3For standards of inclusion, visit superlawyers.com and bestlawyers.com.