Accountants are professionals. They carry malpractice insurance. They are potential deep pockets. For these reasons, accountants sometimes find themselves defending against liability claims in business divorce lawsuits. The theories of accountant liability vary. Accountants owe their clients a duty of reasonable care, breach of which exposes the accountant to a claim of professional negligence / accounting malpractice. Alternatively, or in addition, accountants can face liability for “aiding and abetting” another person’s torts, like aiding and abetting another’s breach of fiduciary duty, fraud, or conversion, including failure to report fraud an accountant discovers while performing its services. Our blog about 1650 Broadway addressed these principles.
But, “[a]s a general rule, accountants are not fiduciaries as to their clients,” except where they are “directly involved in managing the client’s investments” (Caprer v Nussbaum, 36 AD3d 176 [2d Dept 2006] [citations omitted]).
What about bookkeepers? Unlike accountants, who generally have their own accounting firm or practice, bookkeepers often (though not always) work in-house, either as an employee or independent contractor. Is a bookkeeper a fiduciary to a business entity where an accountant is not?
A recent appeals court decision, Schiano v Harsanyi (230 AD3d 820 [2d Dept 2024]), considered this interesting question along with whether courts may hold bookkeepers liable for “aiding and abetting” a business owner’s fraud. The answer: bookkeepers beware.
Continue Reading Bookkeeper Liability? It’s a Real Thing