Accountancy Negligence Claims and the Recession - By: Tim Bishop

Accountancy negligence claims are on the up. This is mostly due to the recession and the increased use of the profession.

This could be down to the fact that investors lose a lot of money during economic downturns and are looking for someone to pin the blame on. Who is available to blame in this situation - their accountant, accountants are often seen as cash cows with easy access to money and therefore worth suing!

Some larger Accountancy firms have been taken to court. These include Ernst and Young as well as KPMG and PrciewaterhouseCoopers and they don't get much bigger than those firms. But what also seems to be happening is that as the 'big boys' get sued, the smaller firms are also facing questions and potentially they are also facing professional negligence claims simply because there is a sense that they too ought to pay for their part in the final crisis, or their perceived part.

True it is more difficult for any investors to successfully sue their accountants for negligence in the UK than if they were in the US. This is merely due to the fact that the legal threshold for proving liability is a lot higher in the UK than it is in the USA.

But whilst investors are not able to sue and to take accountancy negligence claims, it is certainly true that others can sue and indeed they really do make professional negligence claims against accountants.

It is not always the investors, it could be small firms or self-employed people. Looking back a few years it would not have even been considered that people would bring accountancy negligence claims. Now it is becoming much more of a reality and something that really could happen and may happen more regularly in the future.

This has led to some fear within accountancy firms who think that they could be held to account for all the losses incurred if a business that they regularly audited collapses. They are also concerned that this could happen even if they are only partially to blame. The Government has been repeatedly asked by accountancy firms who undertake auditing to limit liabilities and whilst this has not been successful yet, it will be interesting to see if this does indeed happen or will accountants simply have to make friends with specialist professional negligence solicitors.

About the Author

Bonallack & Bishop are specialists in providing advice upon professional negligence claims. If you need advice on accountancy negligence claims then contact them today. Senior Partner Tim Bishop is responsible for all major strategic decisions at the firm, which he has grown by 1000% in 13 years. He sees himself as a businessman who owns a law firm.

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