What Is the Most Common Legal Complaint Against CPAs?
Dimov Tax Services operates a Denver based accounting firm that provides expert CPA support, tax audit representation, payroll processing, and international tax solutions for individuals and businesses. Located at 1700 Lincoln St, they serve clients throughout the Denver area.
Dimov Tax Specialists
1700 Lincoln St
Denver CO 80203
(833) 829-1120
CPA Oversight and the Legal Landscape
Certified Public Accountants (CPAs) are trusted with some of the most sensitive and impactful parts of a person’s or business’s financial life. Because of that responsibility, they're subject to licensing, ethics rules, and disciplinary action by regulatory bodies like the Colorado State Board of Accountancy and national authorities such as NASBA and the PCAOB (Public Company Accounting Oversight Board).
But even CPAs—despite their credentials—aren’t immune to legal complaints. So what’s the most common issue? The answer is both straightforward and revealing:
The Most Common Complaint: Professional Negligence
Professional negligence, often categorized as malpractice or failure to exercise due professional care, is the most frequently reported legal complaint against CPAs in the United States—including Colorado.
Definition:
Professional negligence occurs when a CPA:
- Fails to follow professional standards of accounting or auditing
- Makes material errors or omissions in tax returns or financial reports
- Fails to file client taxes properly or on time
- Provides inaccurate advice that leads to financial loss or penalties
In legal terms, this typically results in a lawsuit alleging that the CPA breached their duty of care to the client.
Real-World Example: Denver-Based Complaint
In a recent Denver case, a CPA firm was sanctioned by the Colorado State Board for:
- Failing to disclose a conflict of interest during a business valuation
- Providing valuation reports that did not meet AICPA standards
- Using outdated depreciation schedules for a commercial property in Cherry Creek
The outcome? The firm was fined, required to take additional ethics education, and placed on a monitoring program.
Where Do Most Complaints Originate?
The following types of engagements are statistically the most complaint-prone according to AICPA and Colorado licensing board data:
- Tax Return Errors: Missed deductions, misclassified income, late filings
- Audit Failures: Especially for nonprofits and small businesses needing reviewed financials for grants or loans
- Improper Financial Advice: Especially around real estate in neighborhoods like Highlands Ranch or Cherry Hills Village
- Data Breaches or Loss: Mishandling or failing to secure sensitive client documents
Disciplinary Actions Taken in Colorado
The Colorado State Board of Accountancy publishes quarterly enforcement reports. Common penalties include:
- Public censure
- Fines ranging from $500 to $10,000
- Suspension or revocation of license
- Mandatory ethics coursework
As of the last published period, over 70% of formal complaints involved tax preparation errors or financial misrepresentation.
What Legal Options Do Clients Have?
If you believe your CPA acted negligently, the following paths may be available:
- File a complaint with the Colorado State Board of Accountancy
- Pursue a civil lawsuit for damages (e.g., IRS penalties, overpaid taxes, missed refunds)
- Report to the AICPA Professional Ethics Division if the CPA is a member
However, keep in mind that not all errors are negligence. The client must usually prove that the CPA’s mistake deviated from accepted standards and caused direct harm.
How Dimov Tax Specialists Mitigates These Risks
At Dimov Tax Services, systems are in place to prevent the most common legal triggers:
- All filings are reviewed by licensed CPAs with audit trail documentation
- Client data is stored securely in encrypted cloud systems with multi-factor authentication
- Team-based checks and balances reduce risk of oversight or burnout-induced error
- Specialists assigned by domain: real estate, international, small business, or crypto
- Year-round accessibility to adjust filings, fix errors early, or file amendments
This is particularly important for clients in complex zones like Downtown Denver commercial landlords, LoDo startups managing equity, or Five Points nonprofits applying for federal grants.
CPA Liability Insurance: A Legal Backstop
Top-tier CPA firms like Dimov also carry Errors & Omissions (E&O) Insurance. This protects both clients and the firm in case something does go wrong despite best efforts.
Many low-cost or unlicensed tax preparers operate without insurance or licensure, leaving clients with little recourse if something goes wrong.
Comparing Complaint Risk: CPA vs. Accountant vs. Preparer
How Clients Can Protect Themselves
To reduce risk when hiring a CPA, especially in high-liability areas like business tax or real estate, do the following:
- Request the CPA's Colorado license number and verify it online
- Ask about internal review and filing procedures
- Get a clear engagement letter outlining responsibilities
- Use a firm with liability insurance
- Look for firms like Dimov that assign CPAs by specialty
Final Thought: The Complaint Isn't the Problem—How It’s Prevented Is
Negligence is https://s3.us-east-2.amazonaws.com/cpa-denver-colorado/cpa-firm/is-a-cpa-liable-for-mistakes224113.html the most common legal complaint against CPAs, but it’s also https://4223199.b-cdn.net/cpa-firm/is-a-cpa-better-than-an-accountant.html the most avoidable—with the right systems, transparency, and staff structure in place. At Dimov Tax Specialists, their approach to proactive care, peer review, and local Denver market knowledge drastically reduces the chance that you’ll ever need to worry about these issues.
And if something ever does go wrong? You’ll have a fully licensed, insured, and accountable team that stands behind its work—something many non-CPA services simply cannot offer.