Question

1.

a. What is the standard of care in a standard negligence case versus a professional standard of care?

b. What standard of care applies to an accountant that does work for client?

c. Can an accountant be held liable in civil court if? 1) makes a mistake in their representation, or 2) knowingly gave false advice to a client? Consider the Ultramares rule? the Restatement rule? And the Reasonably Foreseeable User rule?

Answer 1

1.

a)

Standard of care in negligence refers to the degree of care that must be given/exercised under any situation or circumstances by the reasonable person/ expert. Care like attention, caution, prudence, etc must be exercised by the person. If these standards are not met out, the client may sue the person for negligence.

In the professional standard of care, it is the duty of professionals to provide good and quality services and act reasonably. The acts that are required in any particular profession must be taken care of by the expert. The standard of care is important and should be exercised by the professional or liable person. If these standards are not met by the person then the client has the right to sue.

b)

Standard of care that the accountant must exercise or take care of the client are as follows:

- Perform all services in accordance with acts, guidelines and as per ethics and social responsibility.

- Provide a true and fair view of financial statements.

- Confidentiality is expected from the accountant

- Reasonable grounds to believe that information provided by the others were wrong if the accountant uses that information on trust.

c)

1. If an accountant can prove that he had no knowledge that statement was false or misleading or had no intent to mislead anyone. If he proves this he cannot be held liable.
2. As the accountant has provided false advice knowingly to the client, he will be held liable by the court. As per the Ultramares rule, accountant owes a duty of care to those persons for whose “primary benefit” financial statements are intended.