Ch. 11 lecture (Liability of Accountants) Flashcards
3 common law liabilities to clients
- negligence
- breach of contract
- fraud
what equals negligence
negligence =
Duty
+ breach
+ causation
+ Damages
duty
breach
causation
damages
negligence
where the promisor neither performs his contract nor does he tender performance, or where the performance is defective
breach of contract
fraud
when it comes to privity or near privity, who is someone liable to?
liable only to those with whom they are in privity or near privity of contract
liable to foreseen, or unknown, users of their reports or financial statements
the restatement of torts rule
liable to those whose use of their reports or financial statements is reasonably foreseeable
reasonably foreseeable users
who relies on audits
- creditors
- lenders
- suppliers
- investors
- donors
- what happened at the trial coourt
- important facts
- those that make a difference in the outcome
what part of reading case is this?
the facts
- in the form of a question
- what is the court deciding
what part of reading a case is this?
issue
answer to the question asked in the issue
what paart of reading a case if this ?
holding
reasons the court reached the decision it did
what part of reading a case is this ?
analysis
working papers
does the accountant own their own woring papers
yes they have ownership, but the client has the ability to ask for access to the working papers
hows the only way working paprts can be disclosed
accountant-client privilege
(varies widely by state)
33 Act - registration statements
- AFS part of IPO
- missstatemetns and omissions
- no reliance or privity required
33 Act
