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Accountant's Professional Liability
Audit Failure
Costello Forensic Accounting assisted defense counsel for a local accounting
firm in a case involving fraud by a corporation's executive officers. The
Bankruptcy Trustee alleged an audit failure had resulted in a material loss
to the bankruptcy estate. Costello Forensic Accounting reviewed the
auditor's work papers and developed credible testimony that allowed the
auditor to escape liability.
Investor Fraud
In an action brought by a widow who relied on her independent CPA for
assistance in a land development deal, Costello Forensic Accounting provided
expert testimony that allowed the plaintiff to recover damages from her CPA
firm. Testimony focused on shortcomings in the work of the CPA, who had
advised the widow to repay a note that she and her partner had guaranteed so
that she could take all of the losses for tax reasons. The CPA had
subrogated his judgment to her partner, a local attorney, who recommended
that she take this approach to allow him to escape repayment of the
indebtedness.
Audit Failure
Private investors brought an action against an auditing firm claiming the
auditors had commited an audit failure that cost them their investment in
the closely held firm. Following the deposition of Costello Forensic
Accounting's expert, the matter was settled by the parties. Testimony
focused on inventory and reserve issues, as well as income recognition
schemes.
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