The Credit Crunch and Accountancy Negligence Claims

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. So who better to blame than their accountancy firms and they will often assume that accountants are some kind of 'cash cows' who can simply be milked for money!

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. The current trend is that the larger firms are being sued and the smaller firms are also suffering from potential professional negligence claims all becuse their is a general idea that they must be responsible for any economic downturns.

It is fact that it is much more difficult for a company to sue their accountant in the UK than it would be 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 does create unease amongst accountancy firms whom worry about what they can and cannot be blamed for, especially when a business they audit collapses. There is also a worry that this will still happen even if they are only partially at fault. 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.


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For advice on professional negligence claims contact Bonallack & Bishop, specialist solicitors experienced in dealing with accountancy negligence. Senior Partner Tim Bishop is responsible for all major strategic decisions, seeing himself as a businessman who owns a law firm. He has expanded the firm by 1000% in 13 years.