Acct 4420 Chapter 17 new

Acct 4420 Chapter 17 new - Acct4420 Liability Chapter17 The...

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Acct 4420 Chapter 17  Professional  Liability
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Chapter 17 page 2 2 factors which make legal liability for accounting professionals more complex: Doctrine of joint-and-several liability Unlike other professions, auditors have little control over third parties that use their product (i.e. the auditor’s report). Concept of privity relates to this issue. Privity refers to the parties that are included in the contractual relationship with the auditor. Chapter 17Professional Liability By certifying the public reports that collectively depict a corporation’s financial status, the independent auditor assumes a public responsibility transcending any employment relationship with the client. The independent public accountant performing this special function owes ultimate allegiance to the corporation’s creditors and stockholders, as well as the investing public. The Supreme Court (in United States v. Arthur Young & Co ., 1984) commented on the public responsibility assumed by the accounting profession.
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