Certified Public Accountants (CPAs) and other qualified tax professionals in San Diego must adhere to a strict professional code when conducting audits or other services for individuals or corporations. Failure to follow accepted industry standards or California or federal guidelines represents an act of professional malpractice.
Such errors can result in undue financial hardship for individuals or businesses. In fact, an error may result in civil – or even criminal penalties – for a client, particularly if his or her CPA committed (or failed to identify) fraud. Victims may suffer other financial or professional repercussions as well.
Victims of CPA or tax accounting malpractice may have the option to sue for compensation. Such action may help to recoup damages that are a result of a CPA’s mistakes or misconduct. These cases can be quite complex. Your claim should be filed well before the state’s two-year statute of limitations expires, as outlined in section 339 of California’s Code of Civil Procedure. Below is an overview of some of the most pertinent details of a CPA malpractice claim.
What constitutes malpractice by an accountant, CPA or tax professional?
Malpractice is a breach of established professional standards or codes of conduct. It represents a form of negligence.
The law recognizes two general categories of CPA or accountant malpractice. They are:
- simple negligence – when a CPA or tax professional unknowingly or inadvertently strays from Generally Accepted Accounting Principles (GAAP) or Generally Accepted Auditing Standards (GAAS); or
- gross negligence – when a CPA or tax professional knowingly or intentionally violates principles, standards or regulations (such as “cooking the books” or hiding funds).
Accountant or CPA malpractice can range from simple procedural errors to more complex cases of malfeasance. Common examples of tax professional or CPA malpractice include:
- tax fraud;
- tax evasion;
- poor tax advice;
- tax errors resulting in penalties and fines;
- falsifying reports or records;
- inaccurate billing practices; and
Generally speaking, any deviation from standard and accepted practices may qualify as malpractice.
What must I prove in order to sue my CPA or accounting professional?
A malpractice lawsuit must establish the basic tenets of negligence. These are as follows:
- the defendant had a responsibility to you (this requires providing proof of a professional relationship between you and the defendant);
- the defendant deviated from professional standards;
- the defendant’s actions resulted in financial damages; and
- the defendant’s actions were the proximate cause of damages.
These elements may be established with the presentation of evidence and witness testimony.
What kind of evidence must I provide for my malpractice claim?
Evidence can be used to establish basic facts of the case, such as the relationship between you and the defendant and how the defendant deviated from California’s professional standards for accountants.
Examples of evidence may include:
- billing statements or contracts;
- tax records;
- tax returns;
- previous citations or disciplinary action taken against the CPA as filed with California’s Department of Consumer Affairs (note: complaints against CPAs are not public record); and
Some types of evidence may be particularly difficult to obtain. A CPA/tax malpractice attorney can assist with this aspect of a claim.
I am ready to take action. What is my next step?
Take advantage of a free case consultation in San Diego to learn about your case. Call 619-296-5884 or contact us online.
This post is also available in: Spanish