Question

What is the extent of a CPA’s tort liability to third parties?

Group of answer choices

When an accountant is negligent, the majority of states extend liability to anybody who might reasonably be seen as relying on the accountant’s work product.

A CPA is liable only to the client, because that is the only party who has contracted with the CPA for her services.

If an auditor commits fraud, the auditor’s liability extends only so far as to anyone the auditor could have foreseen would use the auditor’s work.

A CPA can be liable to the client, but not to a third party, for concealing facts.

None of these statements correctly describe the CPA’s tort liability to third parties.

Answer 1

Professional Negligence: Negligence may be viewed as “failure to exercise due professional care".Both clients and third parties can sue CPAs for the tort of negligence, which is a wrongful act, injury, or damage for which a civil action can be brought. Negligence can be referred to as ordinary negligence and gross negligence. Ordinary negligence is defined as failure of duty in accordance with applicable standards, and gross negligence is the lack of concern for the likelihood that injuries will result.