Professional malpractice can happen in several industries. When an accountant or an accounting firm causes financial harm to a client through malpractice, the client has options to address it.
Accountants are bound by accounting requirements in generally accepted accounting principles (GAAP) and the international financial reporting standards (IFRS). If an accountant falsifies financial statements by overstating assets and understating debts, for example, that may harm the client and it may be a violation of those standards.
Accountants are also responsible for avoiding conflicts of interest and providing independent reviews of financial records. If the accountant does not identify financial errors or fraud, or fails to ensure there are appropriate internal controls, this may constitute malpractice.
Finally, accountants have a fiduciary duty to their clients which means they must act in their clients’ best interests. It may be malpractice if they breach this duty.
Defending against allegations of malpractice
Accountants who are accused of malpractice have the right to a defense, but doing so can be difficult. Accounting issues can be complex. Sometimes, what seems to be evidence of malpractice is evidence of something else. Cases involving accusations of accounting malpractice often involve calling upon other accountants to act as expert witnesses. These witnesses interpret the evidence in a way that supports either side.
Professionals who have experience in malpractice defense know the expert witnesses they can call upon