Accountant Responsibilities

INTRODUCTION TO ACCOUNTANT RESPONSIBILITY

An accountants major responsibilities include the preparation of profit and loss statements and monthly closing and cost accounting reports, compilation and analysis of financial information to prepare account entries, establishment and maintenance of accounting control procedures, budget and expenditure plans and reviews, development and maintenance of financial databases, computer software systems and manual filing systems, and preparation of financial reports, statements of records, including balance sheets and amortization and depreciation schedules. Accountants are also responsible for assembling operational data and estimating changes.

The duties an accountant performs for clients require a certain level of trust is established between the client and accountant that the accountant will abide by the ethical and legal code of conduct when preparing the client's financial statements and reports. One word that comes to mind when describing the role of accountants is accountability. Accountability is defined as "the state of being accountable, liable, or answerable."("Dictionary.com") Accountants have an obligation to be accountable to their clients, to third parties, and to the government when providing accurate and reliable financial records, statements, and reports to assist the users of the financial information in their everyday decision making process. Accountant responsibility is the ethical obligation of an accountant to the customer that relies on their work. Being an accountant expands beyond the professional scope and is a personal reflection of the accountant.

ACCOUNTANTS RESPONSIBILITY TO CLIENTS

Accountants are responsible for providing services to their clients in an ethical manner. They should always be honest with their clients and offer accurate and factual numbers and information at all times. It is an accountant's responsibility to never manipulate numbers for a client or suggest manipulation of any sort to their clients. Some accountants work for business firms while others manage their personal client's finances. All accounting-client relationships should be clearly established so there is no misconception of what to expect from the other party. Certified Public Accountants (CPAs) have an obligation to provide their clients with due professional care. In the event of a breach of their agreement, the client must prove duty, breach of duty, losses, and causation in order to recover damages. Likewise, if the CPA can prove the clients loss occurred because of factors other than negligence on their part, the client may be accused of contributory negligence.

ACCOUNTANTS RESPONSIBILITY TO THIRD PARTIES

Accountant's responsibility applies beyond the scope of their clients to third parties using the financial reports prepared by the accountant. In the event of fraudulent conduct, an accountant is held liable for damages to third party users of the financial reports. In order for liability to exist, the third party must demonstrate the accountant was aware the third party was reliant upon the information the accountant provided and that the third party justifiably relied upon the information in its decision making process. In cases of ordinary negligence, the accountant has no duty toward third parties who would be known with certainty to rely on the misrepresentation. The accountants are liable to third parties who could reasonably foresee the third party relying on the misrepresentation. In cases of misrepresentation, the failure of a company has, in the past, led to the accounting firm being required to reimburse the failed investment.

ACCOUNTANTS RESPONSIBILITY TO THE GOVERNMENT

Accountant's responsibilities also extend to the government. Government rules and regulations effect the operations of every business and are an influential part of a business's financial statements. Accountants assist the government in verifying the accuracy of a firm's financial reports by maintaining important accounting and bookkeeping procedures. The government requires firm's to establish a system of accounting, establish a system of reporting their financial transactions and results, and to obtain the review and opinion of an independent accountant. The accountants are then held responsible by the government to maintain accurate and factual records when preparing their financial statements.

SUMMARY OF ACTION OR CLAIM RELATED TO CLIENTS

Grant Thornton LLP, Doeren Mayhew & Co. P.C., Peter M. Behrens, Marvin J. Morris, and Benedict P. Rybicki were involved in misconduct during their audit of MCA Financial Corporation's financial statements in 1998. The allegations against the accounting firms cite the respondents as being involved in aiding MCA in violations of the antifraud and reporting laws contained in the federal securities law and states their engagement in improper professional conduct. In this case, the Division was allowed to

seek suspension from practice, restrictions on the respondent's professional practice, censures, and disgorgement of gains as a result of the accountants' misconduct.

SUMMARY OF ACTION OR CLAIM RELATED TO THIRD PARTIES

Bily v. Arthur Young reached the California Supreme Court in 1992 after the deterioration of Osborne Computer Corporation. In order to obtain financing, Osborne Computer Corporation issued warrants to investors in exchange for direct loans after Arthur Young issued an unqualified opinion which led investors to purchase blocks of the company's stock at favorable prices. It was later discovered that Arthur Young was aware of material weaknesses in the company's controls and failed to disclose the weaknesses as a qualification to its audit report or report his findings to management. The California Supreme Court's ruling was in favor of the defendant. "An auditor owes no general duty of care regarding the conduct of an audit to persons other than the client. An auditor may, however, be held liable for negligent misrepresentation in an audit report to those persons who act in reliance upon those misrepresentations in a transaction which the auditor intended to influence, in accordance with rule of section 552 of the Restatement Second of Torts." (Accountants Liability, Bily).

SUMMARY OF ACTION OR CLAIM RELATED TO THE GOVERNMENT

In 2005, The Securities and Exchange Commission brought charges against KPMG LLP in connection with Xerox Corporation's audits from 1997-2000. The SEC found KPMG caused and aided Xerox in their violations of the