The accounting profession is governed by the states who have the power to license and discipline members of the accounting profession. Uniformity of the law in the various states is ensured by the National Association of State Boards of Accountancy (NASBA).
What Types of Things do Accountants Have Liability for?
Accountants and accounting firms generally have liability for the following:
- Breach of contract
- RICO (Racketeer Influenced and Corrupt Organizations statute) violations
- Breach of fiduciary duty
- Other various securities law provisions
Is There a “Golden Rule” for the Profession?
In general, accountants must follow "generally accepted accounting principles" (GAAP). GAAP rules include all material activities that accountants are involved in. Proof that an accountant or accounting firm did not follow GAAP rules is often very detrimental in an accountant liability case
Are Accountant Liability Claims Tough and/or Expensive to Bring?
Claims against accounting firms tend to be factually intensive, document intensive and expensive to litigate. For example, in order to prove that an accounting firm did not follow professional standards, the plaintiff must carefully review the defendant’s many work documentation as well as the financial records of the accountant’s client and the professional literature to determine whether or not sub-standard practice was involved.
Are There any Major Problems with Bringing these Suits?
The following list gives a potential litigant things to consider before entering into an accountant liability suit.
- The possibility that financial losses resulted from the actions or fault of several persons (including the plaintiff) in addition to the defendant accounting firm or factors other than the wrongful actions of the parties.
- Financial expenses involved because cases tend to involve multiple causes of action and require the use of expert testimony.
- Whether accountant or accounting firm is insured or underinsured.
Can an Accountant be Disciplined for Wrongful Behavior?
The profession and its regulators have created a variety of disciplinary procedures so that those accountants not observing standards can be sanctioned or barred from the practice.
Should I Contact a Lawyer Regarding Suing my Accountant or Accounting Firm?
Accountant liability cases are extremely complicated, time consuming, and expensive. If a business is out large sums of money due to accountant wrongdoing it may be worth hiring a products and services lawyer to sue the individual or firm. Those with losses of smaller amounts may wish to contact a lawyer to determine whether proceeding with a suit is financially wise.