Chapter 46 - Legal and professional responsibilities of auditors, consultants, and securities professionals. After reading the material in this chapter, you should be able: Understand the duties that securities professionals and accountants owe to their clients and third parties, learn to behave in a manner that prevents you and your firm from incurring liability to clients and third parties. | Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 10 History and Nature of Corporations Organization and Financial Structure of Corporations Management of Corporations Shareholders’ Rights and Liabilities Securities Regulation Legal and Professional Responsibilities of Auditors, Consultants, and Securities Professionals Corporations P A R T Legal and Professional Responsibilities of Auditors, Consultants, and Securities Professionals P A E T R H C 46 Madness in great ones must not unwatched go. William Shakespeare, Hamlet, Act. 3, Scene 1 46- Learning Objectives Understand the duties that securities professionals and accountants owe to their clients and third parties Learn to behave in a manner that prevents you and your firm from incurring liability to clients and third parties Auditors, consultants, and securities professionals owe a general duty to their clients and other persons affected by their actions to exercise the skill and . | Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 10 History and Nature of Corporations Organization and Financial Structure of Corporations Management of Corporations Shareholders’ Rights and Liabilities Securities Regulation Legal and Professional Responsibilities of Auditors, Consultants, and Securities Professionals Corporations P A R T Legal and Professional Responsibilities of Auditors, Consultants, and Securities Professionals P A E T R H C 46 Madness in great ones must not unwatched go. William Shakespeare, Hamlet, Act. 3, Scene 1 46- Learning Objectives Understand the duties that securities professionals and accountants owe to their clients and third parties Learn to behave in a manner that prevents you and your firm from incurring liability to clients and third parties Auditors, consultants, and securities professionals owe a general duty to their clients and other persons affected by their actions to exercise the skill and care of the ordinarily prudent professional in the same circumstances Professional’s duty to exercise reasonable care is a subset of negligence standard Two elements compose the general duty of performance: skill and care Overview Professionals are not guarantors of the accuracy of their work or that advice they give to clients will work out well However, when clients sue professionals, there are three principal bases of liability: contract, tort, and trust Professionals’ Liability to Clients A professional contracts with a client to perform as agreed with the implied duty to perform as the ordinarily prudent person in the profession would perform If the professional fails to perform as agreed, s/he may be liable for compensatory damages and consequential damages Contractual Liability A professional is negligent if s/he breaches the duty to act skillfully and carefully and proximately causes damages to the client The suitability and know-your-customer rules of the NASD and .
