Category: Accounting Malpractice

Last July, hackers made it into JP Morgan Chase’s customer account database. In a recent filing with the Securities and Exchange Commission, the company disclosed the extent of the breach. It reported that the hackers had access to 76 million household accounts and seven million small business accounts.

That makes the attack one of the largest breaches so far. While hackers did gain access to those customers’ names, addresses, phone numbers and email addresses, JP Morgan Chase reported, “there is no evidence that account information for such affected customers – account numbers, passwords, user IDs, dates of birth, or Social Security numbers – was compromised during the attack.”

The other good news is that so far no money appears to have been taken from any of those accounts, and no suspicious activity has been observed.

A debate is brewing on Capitol Hill over the treatment of Medicare patients who need rehab after a hospital stay. Typically, these patients can be treated at several types of facilities – but the government is taking an interest because the costs vary greatly.

If a patient leaves the hospital needing rehabilitation, it can typically be administered from a variety of facilities, depending on the injury. They include:

• specialized rehab hospitals,
• a skilled nursing facility,
• outpatient therapists, or
• in home health care aides.

The current debate is over the fact that the cost for rehab hospitals are much higher than the costs for treatment at skilled nursing facilities. This issue re-surfaced in June, after a report was released from MedPAC – the Medicare Payment Advisory Commission.

Audit-related malpractice claims tend to comprise only a small part of accounting malpractice claims (tax preparation claims accounts for the majority), but are severe and can be quite costly to the accounting firm. Claims can either be from public company audits or audits of nonpublic organizations. An estimated 40% of all audit claims allege that the auditor either failed to advise a client of “internal control weaknesses” that should have been corrected to reduce the risk or fraud, or the auditor failed to detect fraud altogether.

Three types of claimants bring on audit claims: a client business (often asserts claims that arise from mismanagement or fraud by employees or management); shareholders (typically pursing claims to recover returns and lost investments); and lenders (usually claiming reliance on an auditor’s report in issuing lines of credit and attempts to recover losses when a client business fails).