Does An Accounting Firm Have the Responsibility to Discover Fraud and Embezzlement ?
In Dancor International, Ltd. v. Friedman, Goldberg & Mintz, 288 Ill. App. 3d 666, 673, 681 N.E.2d 617, 224 Ill. Dec. 302 (1997), the plaintiff brought a malpractice action against a certified public accounting firm alleging that the firm failed to detect warehouse fraud and embezzlement committed by Dancor's director and office manager.
Dancor had also filed a 35-page RICO lawsuit in federal court against its director, which alleged 226 specific fraudulent acts by its director. Dancor, 288 Ill. App. 3d at 669.
This court held that a professional opinion from Dancor's new accountants was not required to start the limitations period running, since the plaintiff had enough information without a professional opinion to file the 35-page federal RICO complaint alleging fraud and embezzlement by its director. Dancor, 288 Ill. App. 3d at 674.
Thr court further noted:
"The mere fact that the extent of injury is not immediately known or ascertainable does not postpone the triggering of the statute of limitations." Dancor, 288 Ill. App. 3d at 677, citing Golla v. General Motors Corp, 167 Ill. 2d at 364.