Harrisburg Firm Investigates Accounting and Auditing Malpractice

Robust litigation support for plaintiffs and defendants in negligence cases

A certified public accountant is a licensed professional, who must adhere to ethical and professional standards. Failure to do so can result in financial losses for users who have relied on the accountants’ or auditors’ reports or advice. When that happens, the wronged party can pursue a malpractice lawsuit against the accounting firm. But proving that case requires evidence of negligence that can only come from an expert in accountancy.

At times, accountants can find themselves having to defend their work and their actions even when they are able to evidence that they were in full compliance with ethical and professional standards. Presenting their work to scrutiny by an objective, independent third party can help bolster their assertion that they executed their responsibilities in a professional, diligent manner.

At Breon & Associates, Accountants and Advisors, we provide reliable litigation support in accounting and auditing malpractice cases. Working with plaintiff or defense attorneys, we carefully examine records to determine if the accountant or auditor has in fact breached professional standards and directly caused client losses. We even calculate the amount of losses, which often requires complex analysis. If the case goes to trial, our experts make credible witnesses, presenting clear, compelling evidence to bolster your case.

Elements of an accountancy malpractice lawsuit

To prove malpractice by an accountant or auditor, a plaintiff must establish these four elements:

• Duty — A professional relationship existed between the accountant/auditor and the plaintiff, conferring a duty of professional-level performance. The standards for performance would be found the Generally Accepted Auditing Standards (GAAS) and Generally Accepted Accounting Principles (GAAP). This element is easily proved by a business agreement or employment relationship.
• Breach — The accountant/auditor breached professional duty to the client with careless, reckless or deliberately substandard performance. Most cases involve negligence, which is evidenced by a careless mistake that a reasonably trained and conscientious professional would not have made.
• Causation — It is not enough to establish that the accountant/auditor made a negligent error; the error must have caused direct harm to the plaintiff. The plaintiff generally must show reliance on the defendant’s work product or advice that led to financial losses.
• Damages — These monetary losses include general damages, which flow directly from the breach, and consequential (or special) damages, which were foreseeable at the time of the breach.

In litigation support, our forensic experts examine records to uncover errors that caused harm to the client. We evaluate these errors in light of GAAS and/or GAAP and render an opinion as to whether the errors constitute negligence. We also calculate damages, understanding that even a single material error can have a cascading effect on a client’s financial statements.

Common errors that lead to accountancy malpractice actions

Some of the examples of audit and accounting malpractice we’ve seen are:

• Failure to detect fraud during an audit
• Materially inaccurate financial statements
• Noncompliance with regulatory requirements
• Errors in business valuation
• Failure of due diligence in a merger or acquisition

When a business or individual is a victim of accountancy malpractice, the financial hardship and reputational loss can be substantial. Those victims deserve to be fully compensated. Likewise, accountants and auditors who are accused of malpractice face liability that could jeopardize their careers. They deserve a robust defense. At Breon & Associates, we are ready to put our knowledge to work, so the truth can be known, and justice can prevail.