There are many forms of accounting malpractice, but one of the most serious is fraud. Fraud includes intentional misrepresentation or alteration of accounting records. These accounting records can include sales, revenues, expenses, inventory, and company stock records. If you own a small business, you may have a full-time accountant on staff. Unfortunately, in some cases, the trust you place in this person may have adverse repercussions down the road. As the owner of a small business, it is important to know the most common ways accounting fraud occurs—and all of these are things you can easily change:
- Allowing the accountant to have a check-signing stamp in lieu of a real signature;
- Failing to regularly review bank statements and bank reconciliations;
- Failing to note new—perhaps fraudulent—vendors in the accounting system, and
- If you have the hardest working accountant who never, ever leaves, even for a vacation, you may have a problem.
Large-Scale Accounting Malpractice Due to Fraud
Accountant fraud can take many forms. In 2013, a former Washington D.C.-area accountant was sentenced to prison for committing tax fraud. John T. Hoang was sentenced in federal district court in Washington, D.C., for “willfully aiding and assisting in the preparation of false income tax returns”. Hoang received a sentence of 48 months in prison, 24 months supervised release, 240 hours of community service and was ordered to pay restitution to the IRS in the amount of $331,896. Hoang was a certified public accountant that admitted he prepared false and fraudulent income tax returns for his clients, creating fictitious business income and expenses. Although Hoang committed fraud on an extremely large scale, all business owners are vulnerable to accounting malpractice due to fraud.
Accounting Fraud on the Rise
According to Accounting Today, accounting fraud is on the rise in U.S. companies. In fact, over half of the organizations which experienced accounting fraud during 2012 and 2013, reported an increase in the number of occurrences of such fraud during 2014. A staggering forty-five percent of U.S. businesses reported they suffered some type of fraud between 2012 and 2014. That fraud was either accounting fraud or bribery and corruption.
Accounting fraud experienced a 16% drop in 2011, and then came back with a vengeance in 2012 and 2013. It is unclear whether the increase in accounting fraud is attributable to enhanced internal controls or the fact there are simply more acts of fraud being committed. Accounting fraud can be extremely detrimental to a small business, impacting revenues and, in some cases, even forcing the business to close.
As an individual or small business owner, you expect your accountant, your auditor, and your CPA to protect your financial interests. In some cases these financial professionals may make honest mistakes which can cost you, but can be fixed. Other times the accounting malpractice goes much deeper than you could imagine, and may cost you your livelihood.
If you feel you are the victim of accounting malpractice, having a Washington D.C. accounting malpractice attorney by your side that will zealously assert your rights is of utmost importance. An experienced accounting malpractice lawyer understands that the consequences of accounting malpractice can be very grave, and will pursue your interests in obtaining justice for you and your business.
Contact Accounting Malpractice Lawyers
At Patrick Malone & Associates, our accounting malpractice lawyers understand the financial complications that often occur after accounting malpractice. As experienced malpractice lawyers, we have represented individuals and small businesses in the Washington, DC metro area, Virginia, and throughout the State of Maryland. Our Washington DC accounting malpractice attorneys work tirelessly from the very start to ensure that all our clients receive the compensation they need to offset the wrongs that have been done to them. Call us at 1-202-742-1500 or toll free at 888-625-6635 or fill out our confidential contact form for a FREE Consultation and review of your case.
The accounting malpractice attorneys at Patrick Malone & Associates have successfully represented injured individuals in Washington, DC, Arlington, Alexandria, Annapolis, Rockville, Baltimore, Richmond, Fairfax, Montgomery County, Prince George’s County, and other locations throughout Maryland and Virginia.