Asked by Sharath Rajendran on May 20, 2024

verifed

Verified

Manufacturing Inc. hires Neri, an accountant, to maintain the company's financial records. Neri does not act negligently or fail to perform any duty but fails to discover that Ollie, the firm's chief finance officer, is embezzling funds from the firm. With respect to the corporation's losses, the accountant is

A) not liable.
B) liable for the entire amount.
C) liable only for the amount that occurred after the accountant was hired.
D) liable only for the amount that cannot be recovered from the embezzler.

Embezzling Funds

The act of dishonestly withholding assets for the purpose of conversion of such assets, by one or more individuals to whom the assets were entrusted, typically to be held or used for other purposes.

Accountant Liability

The legal responsibility of accountants to perform their duties accurately and competently, facing potential legal repercussions for negligence or misconduct.

  • Acquire knowledge about the duty of accountants in recognizing and reporting any fraudulent activities or financial anomalies found within a client's financial statements.
  • Gain insight into the defensive strategies professionals can employ when accused of negligence or misconduct.
verifed

Verified Answer

RC
Riley CabaneroMay 22, 2024
Final Answer :
A
Explanation :
Since Neri, the accountant, did not act negligently or fail to perform any duty, she is not liable for the losses incurred by the corporation due to Ollie's embezzlement. The liability would typically rest with the individual committing the fraud, especially if the accountant fulfilled their duties without negligence.