Asked by Angelica Renata on May 11, 2024
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What is the rationale behind the Restatement test of accountant liability to third parties?
A) The economy will benefit if investors recognize that they have sufficient rights of recovery.
B) It is only fair to hold accountants liable if they are in privity with a plaintiff.
C) Much of what accountants do is prepare work for parties that are not their clients and, therefore, it makes sense for accountants to owe a duty to intended receivers.
D) Potential investors should have a route of recovery even if they could not be foreseen by accountants.
E) The general public should have a route of recovery even if they could not be foreseen by the accountant.
Restatement Test
A principle used in tort law to determine the liability of parties based on the restatement (second or third) of torts, which are influential treatises summarizing the state of tort law.
Accountant Liability
Legal responsibility of an accountant for any negligent or fraudulent accounting practices resulting in financial loss.
Intended Receivers
Individuals or entities that are the specific target or recipients of a particular message, information, or benefit.
- Familiarize yourself with the core principles governing the liability of accountants to third parties, along with the recognition of diverse standards (for example, Ultramares, Restatement).
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Learning Objectives
- Familiarize yourself with the core principles governing the liability of accountants to third parties, along with the recognition of diverse standards (for example, Ultramares, Restatement).
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