. .

Invest in your success.
JVRA helps lawyers win cases by providing critical information you can use to establish precedent, determine demand and win arguments.

ARTICLE ID 158643

Accounting malpractice - Alleged failure to detect employee theft - Negligent compilation of financial statements - Claimed understatement of profits - Diminished sale value of business.

Philadelphia County, PA

The plaintiffs in this action were a fencing company and its owner who brought suit against the defendant accounting company and an individual certified public accountant employed there. The plaintiff alleged that the defendant accountant was negligent in failing to detect that the plaintiff’s bookkeeper was stealing money from the business. The plaintiff also claimed that the defendant accountant negligently prepared the plaintiff’s financial statements so as to understate profits, resulting in a lower sale price for the company. The defendants maintained that the accountant was retained only to perform a compilation of the plaintiff’s business records into a financial statement, based on the information he was given, and that he performed that function well.

The plaintiff’s bookkeeper was given blank, signed checks to be used for legitimate business purposes when the plaintiff business owner was away. However, it was shown that the bookkeeper made the checks payable to herself and stole the money. The plaintiff alleged that the defendant accountant was retained to keep an eye on the bookkeeper and reconcile bank statements, yet he failed to do so.

The plaintiff also alleged that the defendant failed to include some of the plaintiff’s jobs that had not been billed or collected in the financial statement. The omission understated the company profits and resulted in a sale price for the business $________ to $________ lower than it should have been, according to the plaintiff. The plaintiff demanded $________ to settle the case prior to trial.

The defendant maintained that its sole function was to make a compilation of the plaintiff’s business records into the shape of a financial statement. The defendant accountant denied that he was retained to reconcile the plaintiff’s bank statements, audit the books or to ensure the honesty of the plaintiff’s bookkeeper. The defendant argued that the bookkeeper in question had been caught stealing money from the plaintiff’s petty cash, yet was not terminated and continued working as the bookkeeper for the business. The defense contended that the plaintiff owner was comparatively negligent in giving the bookkeeper blank checks and failing to follow-up regarding how she had used the checks were used.

The case was tried as a bench trial with a verdict for the defendant. Post-trial motions are pending.

To read the full article, please login to your account or purchase

5 ways to win with JVRA

JVRA gives you jurisdiction-specific, year-round insight into the strategies, arguments and tactics that win. Successful attorneys come to the table prepared and use JVRA to:

  1. Determine if a case is winnable and recovery amounts.
  2. Determine reasonable demand for a case early on.
  3. Support a settlement demand by establishing precedent.
  4. Research trial strategies, tactics and arguments.
  5. Defeat or support post-trial motions through past case histories.

Try JVRA for a day or a month, or sign up for our deluxe Litigation Support Plan and put the intelligence of JVRA to work for all of your clients. See our subscription plans.