Professional Negligence in England and Wales - Part 1

Article Abstract:

Legal liability for professional negligence in the United Kingdom is often studied by Canadian accountants, as Canadian law usually follows that of the English. The English law consists of about 5,000 words, and much is based on other United Kingdom laws so it is not relevant in Canada. Negligence is considered when there is an act or omission that happens due to the accountant's failure to use skill and care appropriate to her profession. Litigation can occur from misunderstanding concerning the degree of professional responsibility or from alleged negligence in discharging responsibilities. The misunderstandings can largely be avoided by a well-written engagement letter when an accountant undertakes a job from a client. Restrictions or exclusions of liability written into an engagement letter are not always upheld by the courts. Liability to third parties is an area where more litigation has been successful, expanding the scope of professional responsibilities.

United Kingdom, Accounting and auditing, Negligence, Professional ethics, Liability (Law), Legal liability

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The Reed Decision - Part 1

Article Abstract:

Reed Communications, Inc. was issued a 'cease trade' order by the Alberta Securities Commission, after its use of fraudulent evidence was learned. Evidence of claimed sales success rested on a phony contract. The auditor's function is to safeguard and fulfill the public interest. An accountant who becomes an auditor must take on the role of tester and reporter. The auditor's representation led to fake representations in the prospectuses.

Standards, Auditing

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The Reed Decision - Part 2

Article Abstract:

The auditors in the Reed case were found to have failed to reach full, true and plain disclosure standards. Failure to make a timely, inexpensive verification led to a host of mistakes. The commission's ruling is broad and extends the auditor's responsibility to that of a public trust. The obligation regarding the prospectus tests the limits of the Alberta Securities Act. The solicitor must only meet a 'reasonableness test'.

Securities law

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