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COMEDY STORE SUES CPA FIRM


Lee B

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"The Comedy Store filed a lawsuit against its accounting firm, alleging that it missed out on receiving at least $8.5 million in COVID-19 relief funds due to “misrepresentations, gross negligence and misconduct.”

According to the suit filed Tuesday in Los Angeles Superior Court, accountants Moss Adams, based in Seattle with offices in Los Angeles, misrepresented its “expertise and knowledge about” the federal COVID-related relief program and failed to inform the Comedy Store that the application to apply for the government grants was closing in August 2022."

Moss Adams is a good sized West coast regional CPA Firm.

I handled the PPP Loan applications and the forgiveness applications for 5 different small business clients.

At our size we tend not to think about the risk of handling things like this🤨

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I had the opportunity to work with Moss Adams when I was a Corporate Controller early in my career.  I was not impressed.  Overpriced and un-responsive are the first two words that come to my mind when I think about them.   After I left, the Moss Adams CPA assigned to our account took over my position.  He called me a week after I left and asked how to pay the corporate PR taxes online.  The company was sued for wage and hour violations 5 years after I left.   Big verdict.   Your article does not surprise me.

Tom
Longview, TX

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1 hour ago, BulldogTom said:

.  .  .    After I left, the Moss Adams CPA assigned to our account took over my position.  He called me a week after I left and asked how to pay the corporate PR taxes online.  .  .   .  .

Tom
Longview, TX

Actually I understand how that could happen. When I became a Controller for a good sized beer distributor/food wholesaler after being a Staff Auditor for a Big 8 Firm

and an Accounting Supervisor for a Forest Products company, I had never worked with or audited payroll.

Fortunately I had a very experienced bookkeeper who took care of all of the payroll related tasks.

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Back then, no one was an expert at the new offerings. And the ERC rules changed after the fact!

Whatever the outcome, the employer is still responsible for the lack of effort. Same as the employer being responsible for taxes even they have someone else manage their deposits. Maybe they win negligence of some sort. Likely settled by the insurer though  

 

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I didn't initiate, encourage, or offer to help any client OBTAIN a PPP loan.  I told them if they were interested, they needed to contact their bank or other lender, and I would then help them gather all the information they needed.  Even passed along the names of a few lenders to clients whose bank couldn't get around to them.  But I would not recommend that they get a PPP loan or be involved in initiating the process in any manner.  There were a couple of them who could, and probably should, have obtained at least one PPP loan but they "didn't have time" to contact a lender.  Not my problem.

I even sat with a couple of them while they filled out their loan applications and/or forgiveness applications on their computer, but I never actually interacted with the lenders (other than for my own PPP loans).  As Mediln stated, this was all new stuff, fraught with risk, and the goal posts kept getting moved. This was not a good place to assume risk - the downside was too great at the outset. 

 

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45 minutes ago, ILLMAS said:

Do you think businesses  should sue their banks because they only focused on their large clients and could not help their smaller clients  (+ PPP money ran out)?  

Hard to imagine such a case does not already exist.  With no $ penalty to the plaintiff (too many will take contingency cases, throw the laundry up and see if anything sticks), our system is not as clean as it could be.

I was sued because a driver with no insurance, registration, or license, left a driveway, crossed two sets of double yellows, and hit me in the SIDE.  The insurer paid them $1,000 to go away.  Wold have cost more to defend, even though it was tough to believe I had any change of losing.  That's the thing, the defendants are stuck defending, since the plaintiff has zero risk.  I have no solution, can;t defend on contingency, can't seem to pass any reform to have plaintiff liable on their face, not many sue plaintiffs to recover defense costs.  Just like charge card fees, we all pay...

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Wow. I've gotten so scared of someone suing me! I know that just the time plus a legal retainer would destroy my biz. I pay a bundle for E&O and Cyber insurance, have an umbrella policy via my homeowner's insurance re OIH, and am paying someone to beef up my security re the IRS's new WISP requirement over and above what I've been doing re biz security for years.

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A healthy understanding of the risks is a good thing.  Paying for defense is no joke, but most things get settled from what I can glean.  Personally, the lack of (what used to be common) sense is the eye opener.  Daily, multiple times, I try to educate customers why using an old OS is bad, and explaining to those who care for data of others, why I have code to warn/block them from using an outdated OS.  While I am not "into" believing an old OS cannot be used safely, the issue is there are now rules making such usage a default fail/loss/culpable action for those subject to the regulation, and in reality, for all.

Same issue when not keeping paper records.  Unless updated (and it could be, I have not checked), the IRS rules allowing non paper data retention are like being subject to any time probation search... which no one wants to be subject to.

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4 hours ago, schirallicpa said:

Didn't the SBA put out guidance that we (cpas and ea's etc) weren't supposed to help with PPP loans without coordinating thru them or some mucky bologna?  I just remember thinking I'm not supposed to charge a client for helping him with the PPPs.  And as it turned out, I didn't.  The payroll companies did.

 

 

"NEW YORK, NY (Sept. 22, 2020) – The American Institute of Certified Public Accountants (AICPA), its business and technology arm, CPA.com, and fintech leader Biz2Credit today announced they are teaming up on a new platform, CPALoanPortal.com, to streamline the process for CPA firms advising small businesses both on loan forgiveness under the Paycheck Protection Program (PPP) and additional small business financing options that clients may need to fund growth."

I used Biz2Credit for 2 PPP Loans for my 2nd largest corporate client. I saw a number of different CPA Firms online promoting their PPP Loan related services

with a base fee of $7,000.

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On 9/9/2022 at 8:36 AM, Medlin Software, Dennis said:

April 2020 article:

Bank of America (BAC), Wells Fargo, JPMorgan Chase and US Bank were sued Sunday for allegedly failing to process forgivable loans in the $349 billion Paycheck Protection Program (PPP) on a first-come first-served basis.

That's why I helped my second largest corporate client , because their bank  a northwest regional bank was ignoring them,

not returning their phone calls or emails requesting help with obtaining a PPP Loan.

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Ok, I am curious the outcome at the end.  I feel that client just messed up and want to get someone to blame.   We were told not to take a fee nor apply for client because they have to deal with their bank or lender directly.  We are so nice to provide those online lender name list to client because local bankers seem not know the thing themselves.   It is client responsibility to follow up those online application, we were providing doc.    Now, how come that client missed it and blame accountant?   only if they have engagement letter said accountant will do it from begining to end.   otherwise, how can he sue them only because he thought the accountant told something to him.   How can he prove his case against the accountant?  Bad thing is: the accountant will spend time and money for nothing.    

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