1. Chapter 40 Accountant’s Liability
PowerPoint Slides to Accompany CONTEMPORARY BUSINESS AND ONLINE COMMERCE LAW 6th Edition by Henry R. Cheeseman
Chapter 40
Accountant’s Liability
Copyright © 2009 by Pearson Prentice Hall. All rights reserved.

2. Public Accounting CPA GAAP GAAS Audits Auditor’s Opinion LLP
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3. Liability of Accountants to Their Clients
Breach of Contract
Fraud
Negligence – violation of GAAP or
GAAS – prima facie evidence
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4. Liability of Accountants to Third Parties
Ultramares Doctrine-no negligence without privity
Forseeability Standard-include foreseeable third parties that may see statements
Fraud-reliance
Breach of Contract-usually not because no privity
Copyright © 2009 by Pearson Prentice Hall. All rights reserved.

5. Liability of Accountants Under Security Laws
Section 11-fraud or negligence if in SEC filing
Section 10(b) and Rule 10b-5-antifraud provisions
Section 18(a)false or misleading statements/fraud or reckless conduct
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6. Criminal Liability of Accountants
Section 24-untrue statement or omissions/material
Section 32-cause or make false or misleading statements
Tax Preparation
RICO
State Laws
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7. SOX PCAOB Audit and nonaudit separate Supervision, approval, signature
Hiring restrictions
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