Like attorneys and other professionals, accountants can be sued for malpractice if they fail to provide services at a level expected of a reasonably competent accountant.
What Kinds of Accountant Malpractice are There?
There are two common types of accountant malpractice:
- GAAP and GAAS: Accounts must follow certain accounting rules outlined in the Generally Accepted Accounting Principles (GAAP) and Generally Accepted Auditing Standards (GAAS). If an accountant fails to follow these rules he may be guilty of malpractice. Most of the time, you must show that your accountant violated GAAP or GAAS rules to make a claim for malpractice.
- Securities: Accountants who handle sales of securities must follow all federal and state regulations, including The Racketeer Influenced and Corrupt Organizations Act (RICO) and The Securities Acts of 1933 and 1934. If an accountant fails to obey these laws he may be guilty of malpractice. For example, an accountant who creates a false financial statement for a business in order to make an impact on the stock market,has likely committed malpractice.
What Are The Components of a Successful Accountant Malpractice Suit?
Accounting malpractice, like many personal injury cases, can revolve around the issue of negligence: the failure of an accountant to act in a manner expected of a reasonably competent accountant. However, while demonstrating negligence is necessary for a malpractice suit, negligence alone is not sufficient. The plaintiff, party bringing the lawsuit, must show:
- There was a duty of care that the accountant owed to the client. The accountant must have a duty or responsibility to the client.
- Negligence in caring out that duty. Such negligence could include failure to follow proper accounting rules or failure to act in a manner consistent with the law.
- The plaintiff must suffer harm. Actual physical injury is not required; a significant loss in property or finances will suffice.
- The plaintiff must show that the harm suffered was a result consequence of the accountant’s breach of duty.
What Difficulties Present In Accountant Malpractice Are Absent From Other Professional Malpractice?
Although the concept of accountant malpractice is simple enough, the accountant industry itself is subject to numerous restrictions and regulations which other professionals are not subject to. These regulations come from both the responsibilities of the accountant profession and the mobility of the legal tender they are responsible for. A fraudulent accountant, for example, may place revenue in foreign banks, making the money not only difficult to find but also difficult to recover as the legal system of a foreign country must be considered.
Should I Contact an Attorney about Accountant Malpractice?
If you have been accused or are the victim of account malpractice consulting an experienced malpractice lawyer can be extremely helpful. A malpractice lawyer can help you understand how the law affects your case and represent you in court.