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Lecture Dynamic business law - Chapter 11: Liability of accountants and other professionals

After reading this chapter, you will be able to answer the following questions: Under common law, what is the duty of an accountant to his or her clients? Under common law, what is the duty of an accountant to third parties? What is the impact of federal securities law on accountant liability? What is the extent of liability of professionals other than accountants? | Chapter 11 Liability of Accountants and Other Professionals Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Chapter 11: Liability of Accountants and Other Professionals 11- Common Law Accountant Liability to Clients: Accountant Liability for Negligence Accountant liable to client for negligence if he/she fails to exercise care of competent, reasonable professional, and that failure causes loss/injury to client Accountant has duty to perform his/her responsibilities according to generally accepted accounting principles (“GAAP”) and generally accepted auditing standards (“GAAS”) An accountant is liable to a client for negligence if the accountant fails to exercise the care of a competent, reasonable professional, and that failure causes loss or injury to the client. Further, an accountant has the duty to perform responsibilities according to generally accepted accounting principles, and generally accepted auditing standards. 11- Common Law Accountant Liability to Clients: Accountant Liability for Breach of Contract Whenever accountant hired to perform specific task, he/she enters into contract with client Explicitly, accountant agrees to perform contractual tasks Implicitly, accountant agrees to complete work in a competent and professional manner, according to professional standards (GAAP and GAAS) Accountants may be liable for violating explicit and/or implicit agreements Whenever an accountant is hired to perform a specific task, the accountant enters into contract with the client. Explicitly, the accountant agrees to perform contractual tasks; implicitly, the accountant agrees to complete work in a competent and professional manner, according to professional accounting standards. Accountants may be liable for violating explicit and/or implicit agreements. 11- Common Law Accountant Liability to Clients: Accountant Liability for Fraud . | Chapter 11 Liability of Accountants and Other Professionals Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Chapter 11: Liability of Accountants and Other Professionals 11- Common Law Accountant Liability to Clients: Accountant Liability for Negligence Accountant liable to client for negligence if he/she fails to exercise care of competent, reasonable professional, and that failure causes loss/injury to client Accountant has duty to perform his/her responsibilities according to generally accepted accounting principles (“GAAP”) and generally accepted auditing standards (“GAAS”) An accountant is liable to a client for negligence if the accountant fails to exercise the care of a competent, reasonable professional, and that failure causes loss or injury to the client. Further, an accountant has the duty to perform responsibilities according to generally accepted accounting