Accountant negligence is a substantial liability for companies.
Recognizing the signs of accounting malpractice could save your business from costly damages and debilitating litigation.
Accounting malpractice defined
Actionable accounting malpractice occurs when an accountant or department breaches the duty of care owed to a client while providing accounting services. Larger corporations with in-house accounting departments can suffer malpractice issues as well. To recognize signs of accounting negligence, you must understand the standard of care for these services.
The Generally Accepted Auditing Standards and Generally Accepted Accounting Principles serve as the guidelines for accounting best practices. When an accountant violates those standards, the company, estates or shareholders could become plaintiffs in a case.
Signs of accounting negligence
As a business owner or executive, you understand the value of reliable support services, including accounting professionals. When they make negligent choices, you must take swift action to remedy the situation, but first, consider some problems you may encounter that constitute accounting negligence:
- Failure to maintain proper financial records for the company
- Providing incorrect information on financial records or audits
- Giving inaccurate instruction regarding bookkeeping activities
- Failing to prepare tax returns with accuracy or file promptly
- Providing inaccurate or outdated tax advice
Accounting issues can go unnoticed for a long time, often coming to a head once the issues are bigger than the negligent party can cover.
At any time, your accounting department should be able to show you exactly how money flows in and out of the business. Missing deadlines or providing outdated information is inexcusable.