Question

Who is the primary beneficiary of the accountants' work?

Does this differ depending on the accountant's role? If so, how? Why?

Consider why it is so important for accountants to be ethical and tie this into your answer. Does it change your answer to the question above?

Answer 1

A primary beneficiary is the party an audit or accounting service is intended to benefit. The distinguishing feature of a primary beneficiary is that this party is either named in the contract or auditors know of this party by name.Auditors are generally liable to primary beneficiaries for ordinary negligence.

A foreseen party is a group or individual that the client intends the information to benefit and that could reasonably be expected to rely on auditors’ work. In certain jurisdictions, auditors can be liable to foreseen parties for ordinary negligence when the plaintiff justifiably relied on the information and suffered a loss onsuch reliance.

A foreseeable party is the creditor, investor, or potential investor whose decisions normally rely on audited financial statements and opinions on those financial statements. In some jurisdictions, auditors can be liableto foreseeable parties for ordinary negligence.

The primary beneficiary differ depending on the accountants role

In financial accounting, accountants primary responsibility is to generate financial statements and the related disclosures that fairly reflect the financial results and condition of the organization. Its primary beneficiary is outsiders, such as investors, creditors, and lenders.

In management accounting, accountants examines the financial and operational results of a business, looking for opportunities to enhance the results and financial position of the entity. They can also advise management in regard to the setting of prices. Their primary beneficiary is the management team.

In Internal auditng, accountants examines company processes and controls to spot control weaknesses, fraud, waste, and mismanagement. They can also advise on the best control systems to apply to different processes, or how to alter existing controls. Their work benefits both the management team (by eliminating excessive expenditures) and investors (by reducing the risk of loss).

Accountants have the unique responsibility to provide clients with professional services while presenting a truthful and accurate assessment of a company's financial health to the general public.

Integrity is an important fundamental element of the accounting profession. Integrity requires accountants to be honest, candid and forthright with a client's financial information. Accountants should restrict themselves from personal gain or advantage using confidential information. While errors or differences in opinion regarding the applicability of accounting laws do exist, professional accountants should avoid the intentional opportunity to deceive and manipulate financial information.

Objectivity and independence are important ethical values in the accounting profession. Accountants must remain free from conflicts of interest and other questionable business relationships when conducting accounting services. Failure to remain objective and independent may hamper an accountant's ability to provide an honest opinion about a company's financial information. Objectivity and independence are also important ethical values for auditors.

It does not change the answer to the question above because accountants work based on their principles.