Suppose your small business is undergoing a routine audit when it comes to light that your company’s books have been poorly kept. Of course, the term “poorly kept” can range from minor mistakes or sloppy bookkeeping to more serious errors or fraud found in the books. These errors may be relatively minor and easily fixed, or could signal a much more severe problem such as accounting malpractice. In many cases, instances of poorly kept financial books may be only the tip of the iceberg. When the situation is more thoroughly examined, there may be other issues at hand such as:
- Embezzlement which is the result of suspicious accounting practices;
- Unfiled tax returns;
- Improperly prepared tax returns;
- Failure to follow GAAS guidelines and reasonable standards of care in the accounting;
- Wrongful certification of financial statements;
- Flawed advice regarding accounting matters
- Flawed tax advice;
- Faulty audits, and
- Wrongful certification of financial statements.
Your CPA has a duty to you, the client, to discover wrongdoing on the part of your accountant or employees, however an auditor can also make negligent mistakes which can cost you thousands—or hundreds of thousands of dollars. If your financial professional fails to detect fraud because of negligence and lack of exercising the skill, accuracy and fidelity required of such professionals, your resulting financial losses may be compensated in a Washington DC accounting malpractice lawsuit.
Your Relationship to the Financial Professional
It is critical to understand the exact relationship between yourself and your accountant, CPA, or auditor. In most cases, you will have a written contract with the financial professional, which clearly states the expectations of both sides. In audits, an engagement letter may clearly state the audit is not designed to provide absolute assurance that fraud will be detected. The engagement letter may set out in some detail the limits of the auditing process. You may also have an Audit Plan which outlines what the auditor commits to do during the audit. These documents can be useful in establishing a duty of care for your accounting malpractice claim by showing the auditor failed to conduct a proper GAAS audit.
The Sarbanes-Oxley Act Section 404
Under the Sarbanes-Oxley Act, section 404, accountants are charged with reviewing their clients’ internal controls much more carefully, providing a separate audit opinion report on the adequacy of internal controls. This may turn up material weaknesses in the company’s financial reports or findings of deficiencies of internal controls. These areas of concern must be reported to management, and followed up on to ensure the necessary corrections were made. If the findings were not reported to management or the auditor did not ensure the corrections were made, then he or she could be guilty of accounting malpractice.
If poorly kept financial books are discovered, you may want to dig deeper into how your financial professionals are taking care of your money. Accounting malpractice cases in Washington DC and across the country are becoming more and more common. Some of the plaintiffs are asking for millions, or billions of dollars because of such malpractice. The most important step you can take after discovering evidence of accounting malpractice is to speak to a knowledgeable Washington D.C. accounting malpractice attorney. You will want to ensure your rights are protected and that justice is served in a timely manner. Your Washington DC accounting malpractice attorney will take the necessary steps to make this happen.
Contact Accounting Malpractice Lawyers
At Patrick Malone & Associates, our accounting malpractice lawyers understand the financial damages that are often incurred because of poorly kept books. 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 1-888-625-6635 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.