Question

List and define the three rules regarding Accountant liability to third parties.

Answer 1

Rules regarding Accountant liability to third parties-

1) An accountant is liable for damages to his or her client for fraud and negligence, but s/he is liable to third parties, who the accountant knew or should have known were relying on audit, only for fraudulent conduct, and proof of mere negligence is not sufficient.

2) An accountant who signed off on the falsified information. CPAs may also be considered criminally liable and/or negligent if they falsify financial records or accounts, whether it's with or without their client's knowledge.

3) An accountant is liable all third parties whose reliance upon accountant's negligently prepared financial statement is reasonably foreseeable