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.
Individuals and businesses in California often rely on accountants to track financial activity and prepare financial statements and tax returns. Accounting mistakes have the potential to get clients in financial or even legal trouble. Professional malpractice may occur when mistakes arise from negligence, misrepresentation or deviation from professional standards and practices. Under these circumstances, a client could pursue damages from the responsible professional.
A $100 million legal malpractice lawsuit has been filed claiming a conflict of interest as a law firm allegedly represented both the lenders and the borrower during a legal action related to promissory notes. The plaintiff company in the case claims the law firm engaged in deceptive practices and breached fiduciary duties. California readers might be interested in the specifics of the case.
Businesses and individuals in California and around the country rely on professionals such as attorneys, accountants and brokers to manage their affairs, and both professionals and their employers can face severe penalties when documents required by state or federal law are falsified or not submitted in a timely manner. One such case involves an accountant who served as the chief financial officer of a leading management consulting company between 2008 and 2016. Media accounts reveal that the man has been indicted in connection with a scheme that allegedly led to his employer underreporting approximately $12 million in workers' compensation expenses.
The salaries of professional basketball players naturally impress sports fans in California, but the federal lawsuit filed by Kevin Garnett illustrates the risks that wealthy individuals take when they entrust others with their millions. Garnett, now retired from a career with the Timberwolves and Celtics, alleges that his accountant knew that Garnett's wealth manager and business partner was stealing. According to court filings, the wealth manager took $77 million of the professional athlete's money.
California patients and health care professionals may be interested to learn that malpractice claims have increased in recent years. Growth trends have been attributed to insufficient protections against conflicts of interest as well as an increase in people electing to expand into other practice areas.
California business owners often turn to an accountant to help manage their finances. Hiring such a professional can reduce the odds of paying too much in tax or being accused of breaking the law. However, it is possible that an accountant will engage in malpractice that could leave a company vulnerable to criminal or civil penalties. To prevent this from happening, accountants should follow either Generally Accepted Auditing Standards or Generally Accepted Accounting Principles.