Accounting Firm Tied to Rothstein Slams Suit as Smear Campaign

It is a really scary time for all professional advisers, especially those of us who advise private equity and hedge funds. I would put fund-to-fund advisers into this category of those who should be scared. Defrauded investors are now looking to sue the accounting firm that apparently prepared the tax returns for Scott Rothstein's law firm. Mr. Rothstein is the latest power-broker/attorney accused in a $1.2B Ponzi scheme. While it remains to be seen who knew what information and when, most tax return preparers are focused primarily on getting the tax numbers correct and not on whether their client is defrauding investors. Return preparers seldom do much diligence on whether their client may be OVERstating their income. However, a tax return preparer does have access to significant financial information and could, under some circumstances, detect financial fraud.

Should all professional advisers be concerned about trying to detect financial fraud during the course of rendering their professional services?