Chapter 51 Liability of Accountants

Chapter 51 Liability of Accountants - Liability of...

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09/28/09 Chapter 51: Liability of Accountants 1 Liability of Accountants An expanding area of interest to CPAs and their clients. Chapter 51
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09/28/09 Chapter 51: Liability of Accountants 2 General Regulation of Practice State and Federal Regulation of Practice Proposals before Congress AICPA Code of Professional Conduct http://www.aicpa.org/index.htm
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09/28/09 Chapter 51: Liability of Accountants 3 Public Accountants and Certified Public Accountants Accountant : An accountant who deals with financial statements, accounting systems and prepare returns. Certified Public Accountant: (CPA) An accountant who has met certain educational requirements, has passed the CPA examination, and has had requisite experience. Public Accountants and Certified Public Accountants
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09/28/09 Chapter 51: Liability of Accountants 4 CPA Requirements AICPA: State CPA Certificate Requirements to
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09/28/09 Chapter 51: Liability of Accountants 5 Generally Accepted Accounting Standards Generally Accepted Accounting Principles (GAAP) Standards for the preparation and presentation of financial statements . Generally Accepted Auditing Standards (GAAS) Standards for the methods and procedures that must be used to conduct audits . Audits The verification of a company’s books and records pursuant to federal securities laws, state laws, and stock exchange rules that must be performed by an independent CPA .
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09/28/09 Chapter 51: Liability of Accountants 6 Types of Auditor’s Opinions Contemporary Business Application Page 880
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09/28/09 Chapter 51: Liability of Accountants 7 Common Law Liability of Accountants to their Clients Breach of contract Engagement letter A formal entrance into a contract between a client and an accountant. Fraud Punitive damages Negligence Negligence (aka accountant malpractice) Occurs when the accountant breaches the duty of reasonable care, knowledge, skill, and judgment that he or she owes to a client when providing auditing and other accounting services to the client.
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09/28/09 Chapter 51: Liability of Accountants 8 State Causes of Action (cont.) Breach of fiduciary duty Negligent misrepresentation Deceptive Trade Practices.
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09/28/09 Chapter 51: Liability of Accountants 9 Related Specialty Areas Due to declining profits in traditional accounting areas, CPAs expanded into non
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This document was uploaded on 02/02/2009.

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Chapter 51 Liability of Accountants - Liability of...

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