History of Legal Liability of Accountants Accounting Essay
Legal systems and auditor independence. Review of Accounting, 2 377-411. DOI: 10.1007 s11142-011-9141-z. Authors: Hung-Chao Yu. National Chengchi University. To read the. The chapters include: Modern Accounting Methods The Accountant, the Industrial Engineer and the Banker The Contemporary Accountant: His Contribution to Finance Problems The Accountant's Function as a Business Advisor The Functions and Duties of the Office of the Comptroller The Opportunities and Dangers Associated with mergers, the liability of the accountant can be derived from contract law, where the accountant is bound by the contract or engagement letter and the liability of the accountant is based on breach of contract, common law where the concept of the accountant's liability is based on the negligence of the accountant, gross negligence or fraud arising from judicial decisions or statutory legislation, where liability extends to the accountant, his or her assistants and the legal representatives of the accounting firm. For an auditor to be guilty, the auditor must have done something willfully or deliberately. Legal liability of the accountant towards third parties. Anticipated Third Parties or Restatement Standard This approach is followed by the majority of states. b. Expands the scope of who can potentially sue accountants to include third parties whose reliance on the financial statements can be reasonably anticipated. c. Reasons given for allowing the third, Summary. We examine whether US TPAL external auditor liability regimes influence firms' financial restatement decisions. Using a one-year sample, we find that state-level TPAL is significantly negatively related to the likelihood of firm-level financial adjustments. We examine the justifications offered by the Public Company Accounting Oversight Board PCAOB in sanctioning accounting firms and individual accountants, as disclosed in the publicly released Settled Disciplinary Orders SDOs. By using responsive regulation theory, we try to gain insight into regulatory violations. This practice note provides an overview of the liability of a company auditor and the limits that may be placed on that liability under UK law. It explains that an accountant may be liable to the company he has contracted for breach of the terms of his engagement. The accountant may also be liable for tort in the event of negligence in execution.