Understanding accounting malpractice: Maintaining independence in audits

As we established in a previous post, certified public accountants, much like attorneys, physicians or other highly skilled professionals, are subject to rules of professional conduct promulgated by the various states in which they practice.

To recap, the state boards of accountancy in many states, including Florida, have adopted the American Institute of Certified Public Accountants' Code of Professional Conduct, which dictates that all CPAs must fully disclose any conflicts of interest.

Indeed, the AICPA Code provides that accountants must be independent in both appearance and in fact when providing auditing services, and must also be aware of situations in which a conflict of interest might exist that precludes them from acting.

Scenarios in which a CPA would see their independence impaired while providing auditing services include:

  • He or she already has discretionary authority or already makes investment-related decisions on behalf of the audit client
  • He or she already maintains custody of assets on behalf of the audit client
  • He or she already executes buy-sell transactions on behalf of the audit client

Scenarios in which a CPA would not see their independence impaired while providing auditing services include:

  • Conducting a comparative analysis of the audit client's investments to third party benchmarks
  • Assessing the performance of investment managers tasked with oversight of the audit client's portfolio
  • Making recommendations about fund allocations based on the audit client's risk tolerance and other issues
  • Transmitting the audit client's investment selections to third-party broker-dealers so long as he or she is the one who made the decision and authorized the move by the broker-dealer

It's imperative to understand that if a financial loss results from an accountant failing to maintain his or her independence in relation to an audit, or failing to suggest an audit when necessary, he or she may be held liable for malpractice.

If you believe that you have been victimized by some form of CPA malfeasance, consider speaking with an experienced legal professional able to navigate this complex area and fight for justice on your behalf.

No Comments

Leave a comment
Comment Information
Email us for a response

Tell Us About Your Case

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.


Privacy Policy



Jacksonville Office
1300 Riverplace Boulevard
Suite 401
Jacksonville, FL 32207

Toll Free: 866-542-1996
Phone: 904-396-1996
Fax: 904-396-1991
Map & Directions

Miami Office
1395 Brickell Avenue
Suite 800
Miami, FL 33131

Phone: 305-200-8674
Phone: 305-200-8675
Fax: 305-200-8801
Map & Directions

West Palm Beach - By Appointment Only
301 Clematis Street
Suite 300
West Palm Beach, FL 33401

Phone: 561-832-5991
Fax: 561-832-5985
Map & Directions

Panama City Office
305 Cherry Street
Panama City, FL 32401

Phone: 850-481-1386
Fax: 850-640-1247
Map & Directions

Tampa Office
10150 Highland Manor Drive
Suite 200
Tampa, FL 33610

Fax: 813-314-2163
Map & Directions