You depend on your accountant. Whether you use that accountant for your business or personal finances, you expect that your accountant will do his job with reasonable care and according to the rules of professional conduct set forth by the Commonwealth of Kentucky and the American Institute of Certified Public Accountants.
Certified public accountants (CPAs) are bound by these rules of professional conduct. The rules are in place to help protect you from the significant harm that can be done by accounting malpractice or negligence. In Kentucky, the Accounting Code of Conduct requires accountants to:
- Be independent. Accountants should be independent, objective, and unbiased concerning their clients.
- Be objective, maintain integrity, and be free from conflicts of interest.
- Be competent. This includes only taking on work that the accountant can reasonably expect to complete with professional competency, exercising due care, adequately planning professional work, and obtaining sufficient data to do his work.
- Follow the General Accepted Auditing Standards (GAAS).
- Comply with Code of Professional Conduct adopted by the American Institute of Certified Public Accountants (AICPA).
- Keep client information confidential.
Unfortunately, this doesn’t always happen. Sometimes accountants are negligent, sometimes they commit malpractice, and sometimes clients—such as you—are hurt. When this happens to you, you need to know what to do next. You need to know if accounting negligence or malpractice has occurred, you need to understand how long you have to take action, you need to know how to take action, and you need to know how to get help to protect your recovery.
What Is Accounting Malpractice?
Accounting malpractice can result from carelessness or intentional fraud. In any circumstance, the result can be devastating. Some accounting malpractice cases are simple and some are incredibly complex. However, the rules for proving accounting malpractice are the same regardless of how simple or complex the facts are in your specific case.
Accounting negligence or malpractice occurs when:
- The accountant owed you a duty of care.
- The accountant breached that duty of care.
- You were hurt because of that breach of the duty of care.
- The accountant’s breach of the duty of care was the legal reason, or proximate cause, of your injury.
Some examples of accounting malpractice include:
- Failing to file a tax return on time, without requesting an extension.
- Making a mistake on your taxes.
- Keeping incomplete or incorrect financial books.
- Failing to provide correct advice regarding taxes or other accounting matters.
- Committing fraud. This could include securities fraud or CPA license fraud, for example.
- Failing to comply with Generally Accepted Auditing Standards (GAAS) or Generally Accepted Accounting Principles (GAAP).
- Billing fraud.
This list is not all-inclusive, however. It is impossible to foresee every possible way in which a certified public accountant may breach the duty of care, but when a breach of duty does occur, then it is important to take action.
Your Time Is Limited to File an Accounting Malpractice Lawsuit
Accounting malpractice is a form of professional malpractice. Thus, your time to file an accounting malpractice case is limited by the Kentucky statute of limitations for professional services malpractice. This law, found in Section 413.245 of the Kentucky statutes, gives you just one year to file an accounting malpractice case. The one year time limit begins on the date the malpractice occurred or on the date that you reasonably should have discovered that the malpractice occurred.
If you fail to file your accounting malpractice lawsuit in a Kentucky court before the statute of limitation expires, then you will likely lose your right to recover damages. The accountant will file a motion to dismiss your case claiming that the statute of limitations has expired and the judge will grant that motion leaving you without a legal recovery.
Accordingly, it is important to file your accounting malpractice case as soon as possible and before the statute of limitations has expired so that you don’t lose the right to recover for the harm that your accountant has caused you.
Accounting Malpractice Lawsuits
Accounting malpractice litigation officially begins when you file an accounting malpractice complaint in court. The complaint sets forth your cause of action, or how the accountant was negligent, committed fraud, or committed malpractice. Once the complaint has been filed and the accountant has filed an answer to the complaint, then the case will enter the discovery phase.
The discovery phase is critical. It is during this time that you will gather evidence to prove your claim. That evidence can be complicated, but it is important as you go forward with your claim.
Prior to trial, motions may be made to end the case or settlement negotiations may occur. If your case does not end because of a motion or settlement talks then you will need to prove your case to the court in order to recover damages. Your case may be decided by a judge or a jury.
Get the Help You Deserve If You’ve Been Hurt by Accounting Negligence
Accounting malpractice can cause you significant harm. Whether it was your business that was hurt or your personal finances that were jeopardized, you deserve do make a fair recovery. You did nothing wrong by relying on a professional CPA, and you shouldn’t have to pay for the negligence of malpractice of your accountant. However, if you do nothing then you may suffer from a financial setback that could ruin your business or cause you significant personal financial problems.
Our attorneys have over a decade of experience and success in simplifying and winning complex accounting malpractice cases. If you believe your accountant wrongfully caused you or your business financial loss contact us today for a free consultation. You can start a free chat with us or call us any time at 888-450-4456 to learn more and to take the first important step in protecting your rights.