Business owners in California and throughout the country may hire accountants to keep track of their finances. Individuals who have large estates or many assets to manage may do the same. Ideally, an accountant will make sure that an individual pays taxes on time and generally follows accepted rules and accounting methods. However, there is a chance that an accountant will make a mistake or willfully disregard existing laws or other best practices.
If an accountant is preparing a statement on a person’s behalf, he or she will follow Generally Accepted Accounting Principles. When an accountant is auditing records, he or she will follow Generally Accepted Auditing Standards. In the event that these guidelines aren’t followed, an individual may take legal action against an accountant. The type of action a person takes depends on whether a mistake was intentional or was merely negligent in nature.
In some cases, clients who were damaged by an accountant’s actions could file both a negligence and breach of contract case. To prove negligence, it must be shown that a duty of care was breached and that the breach lead to damages to a plaintiff. In some cases, accountants may misrepresent themselves or take action to hide their deception. This is generally considered to be fraud, and it can also be an act of negligence on its own.
If accountants or other professionals engage in fraud or other negligent behavior, a victim may have a right to seek financial or other types of relief. Attorneys may work to obtain evidence of negligence or engage in settlement talks on behalf of a plaintiff. Evidence in a professional fraud case may include irregularities in how records are kept when held up to the standards imposed by GAAP or GAAS standards.