Accountants, like most professionals, are held to strict professional standards when providing services to their clients. If an accountant does not abide by these professional standards, they may be the subject of a malpractice suit for their negligence or errors.
The professional standards in the accounting industry are set by a set of rules known as the Generally Accepted Accounting Principles (GAAP) issued by the Financial Accounting Standards Board. The American Institute of Certified Public Accountants (AICPA) also has its code of professional conduct, while individual states may have professional accountancy standards based on these provisions.
Types of accounting malpractices
Accounting malpractice stems from an accountant’s failure to discharge their duties competently or when they act in their own self-interest. Usually, the client bears the financial losses associated with such misconduct at the end of it all.
Some common accounting malpractices include giving incorrect tax advice, overbilling, fraud, embezzlement, manipulating financial statements, among others. In short, malpractice entails accountants breaching the trust that clients have entrusted them in dealing with their finances.
Accountants owe their clients a duty of care
Regardless of the professional accounting standards applied, accountants owe clients a duty of care. It means that they must:
- Maintain confidentiality
- Avoid conflicts of interests
- Not mislead or misrepresent material facts
- Discharge their duties with competence
- Meet licensing requirements
- Abide by state and federal rules and regulations
Should you be a victim of accounting malpractice, it is prudent to proceed carefully. This is because of the complexities that may arise in your pursuit of justice since things may not be so straightforward.
Protect your interests by learning more about what the law says regarding this type of professional malpractice.