Accounting Principles And Standards Of Professional Conduct

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As accountants and auditors, we are held to, and must comply with, two standards of professional conduct. Those standards are generally accepted accounting principles (GAAP) and generally accepted auditing standards (GAAS). GAAP enforces the uniform standards for preparing and presenting financial statements. GAAS governs the ways and means are used by public accountants when conducting an audit. GAAS establishes the standards for field work and mandates that sufficient evidence be found to provide reasonable assurance for issuing an audit opinion.

Liability to Clients

Please remember, as accountants we are held liable to our clients when we enter into contracts and are hired to perform services. The liability we face can come from items such as breach of contract, fraud and negligence. When an accountant enters into a contract, also known as an engagement, with a client the terms of said engagement are specified. In a contract an accountant has explicit and implicit duties. The accountant must perform all explicit duties in the contract. The implicit duties of the contract are implied, and the accountant agrees to perform them in a proficient and professional manner. If an accountant fails to perform the duties of the contract, he or she may be held in breach of the contract.

An accountant may be found liable for two types of fraud. These two types are actual and constructive. Actual fraud occurs when there is a deliberate omission or misrepresentation of a material
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