Chapter 51

Chapter 51 - Neha Shah Case 51-2 and 51-7 Professor...

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Neha Shah Case 51-2 and 51-7 Professor Rodriguez November 12 th , 2011 51-2: Assuming that the court has abandoned the Ultramares rule, it is likely that the accounting firm of Goldman, Walters, Johnson & Co. will be held liable to Happydays State Bank for negligent preparation of financial statements. This hypothetical is partially derived from In Citizens State Bank the Supreme Court of Wisconsin enunciated various policy reasons for holding accountants liable to third parties even in the absence of privity. The court suggested that this potential liability would make accountants more careful in the preparation of financial statements. Moreover, in some situations the accountants may be the only solvent defendants, and hence, unless liability is imposed on accountants, third parties who reasonably rely on financial statements may go unprotected. The court further asserted that accountants, rather than third parties, are in better positions to spread the risks. If third parties such as banks have to absorb the costs of bad loans
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This note was uploaded on 11/13/2011 for the course ECON 201 taught by Professor Bonistis during the Spring '11 term at NJIT.

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Chapter 51 - Neha Shah Case 51-2 and 51-7 Professor...

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