Accountant Responsibility

1863 Words Aug 9th, 2012 8 Pages
Accountant Responsibility

Introduction
Accountants and auditors help to ensure that firms are run efficiently, public records kept accurately, and taxes paid properly and on time. Accountants analyze and communicate financial information for various entities such as companies, individual clients, and Federal, State, and local governments. The provide accurate information to clients by preparing, analyzing, and verifying financial documents, budget analysis, financial and investment planning, information technology consulting, and limited legal services. They analyze and communicate financial information for various entities such as companies, individual clients, and Federal, State, and local governments (Bureau of Labor Statistics).
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Third Party Actions/Claims
In Marcus Bros. Textiles, Inc. v. Price Waterhouse, L.L.P., 350 N.C. 214 (N.C. 1999), “the Supreme Court of North Carolina held that in order for an auditor to be held liable to a third party, that party must demonstrate: (1) the accountant either (a) knew that the third party would rely on his or her information, or (b) knew that the client for whom the audit report was prepared intended to supply the information to a third party who would rely on that information; and (2) the third party justifiably relied upon the information in its decision concerning the transaction involved or one substantially similar to it. Moreover, auditors owe duty to anyone whom s/he should have reasonably foreseen would rely on the misrepresentations (U.S. Legal.org)”.
Most accountants' third-party liability is defined by case law. A few states have passed statutes organizing the common law. For example, Kansas adopted legislation that takes a different approach to an accountant's liability. “For professional negligence to exist, the plaintiff must (a) have engaged the accountant to perform professional services; or (b) the accountant had knowledge of the third
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