What to Do If Your Accountant Makes an Error

What to Do If Your Accountant Makes an Error

A certified accountant can be valuable for a small business, from formation to financials to the sale of the business. Handling your own accounting might seem like a money-saving strategy, but it may not be the best use of your time and can result in expensive mistakes.

Paying a professional can have benefits that outweigh the costs. However, if an accountant makes an error or gives advice that has financial consequences for your business, it can create a setback. In this case, you may be able to hold the accountant legally responsible for financial losses.

Suing isn’t always the best course of action. If your accountant made a costly error and is unwilling to correct it, you should understand your legal rights and options.

An accountant’s role in a small business

Partnering with an accounting professional can be beneficial for your business before you even start. An accountant can help you with financial statements, business formation, tax issues, and various other matters as your company grows.

Steps to take when you spot accounting errors

When you suspect your accountant made an error, it’s important to get all the facts straight before assuming negligence. Speak with your accountant and review your financials to prevent errors. If the numbers still aren’t adding up, seek a second opinion and amend the error if possible.

Accounting malpractice: When something goes wrong

If your accountant makes an error and is in the wrong, it may be considered malpractice. Negligence is the most common theory of liability that can be asserted against an accountant. Accounting negligence occurs when an accountant fails to provide services expected of a professional.

READ MORE  I Just Started My Small Business Do I Need Payroll Software

To make a successful claim for accountant malpractice, you must show that the accountant owed you a duty of care, breached that duty, harm occurred, and the accountant’s negligence caused the harm.

Available compensation

If you sue an accountant for professional negligence, you are entitled to recover damages resulting from the accountant’s breach of duty. The damages available depend on the circumstances of each case.

What is not considered accounting malpractice

Not all errors made by an accountant are considered malpractice. Errors made by an accountant that you had yet to enter into a formal professional relationship with, errors outside of the accountant’s specified duties, errors that do not result in financial loss, and bad outcomes that are not errors are not considered malpractice.

Examples of accounting malpractice

The two biggest types of accounting errors our attorneys see are tax reporting errors and errors in financial statements during a business transaction. Other examples of accountant misconduct include failure to recommend an audit, errors during an audit, inaccurate reports or statements, mistakes in evaluating a financial transaction, keeping inaccurate records, errors involving inventory or accounts, giving bad investment advice, and various types of fraud.

How to handle suspected accounting malpractice

If you suspect malpractice, save all documents related to your losses and consult an accounting malpractice attorney. They can assess your case and guide you on the next steps, which may involve filing a lawsuit. Keep in mind that filing suit can motivate the other party to settle the claim without going to trial.

Small business owners must hold themselves accountable for their successes and failures. It’s fair to hold professionals working for you to the same standard.

Leave a Reply

Your email address will not be published. Required fields are marked *