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Bank of Business Solutions Student Coaching

Explore the legal and ethical responsibilities of accountants, including duty of care, negligence, causation, and ethical principles in the business context. Learn about the GAAP, breach of duty of care, and the importance of ethics in decision-making.

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Bank of Business Solutions Student Coaching

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  1. Bank of Business SolutionsStudent Coaching

  2. Duty of Care Owed by Defendant to Plaintiff Breach of the Duty of Care by the Defendant Causation Damages Negligence

  3. Foreseeability Test: Accountants owe a duty of care to all foreseeable plaintiffs. Restatement View: Accountants owe a duty of care to members of a restricted group of third parties whom the accountants intend to influence or those whom the accountants know their clients intend to influence. Privity of Contract View: Accountants owe a duty of care to all parties with whom they have a privity of contract. Duty of Care

  4. Professional Standard: In performing services, an auditor has the duty to have that degree of learning and skill ordinarily possessed by a reputable certified public accountant practicing in the same or a similar locality under similar circumstances. GAAP is Relevant: In determining whether the accountant fulfilled its professional duties, one may consider, among other evidence, whether the accountant’s work complied with Generally Accepted Accounting Principles. Breach of Duty of Care

  5. Causal Connection: there must be a causal connection between the negligent conduct and the resulting injury. But For Test: But for the defendant’s negligence, the plaintiff would not have sustained the loss. Causation

  6. Notes exchanged for property, goods, or services are carried on the balance sheet: At the market value of the item exchanged if this is readily determinable. At the present value of the future cash receipts on the note discounted at the borrower’s rate of interest. Asset Valuation

  7. Members of the AICPA accept the responsibility to serve the public interest with integrity, objectivity, and due professional care. Members may encounter pressures from the groups it serves (including clients, credit grantors, etc.) When members fulfill their responsibility to the public, client and employers’ interests are best served. Accountants’ Duty of Care to the Public

  8. Ethics Definition • The study of what is right and wrong. • Refers to actions that would be harmful to others or result in social consequences.

  9. The Difference Between Ethics and Laws • Similarities • Laws and Ethics both refer to proper and improper behavior • Differences • Laws are formal: written rules • Ethics are informal: many subtleties

  10. How to Analyze Ethical Problems in Business • Guidelines to use to help us make ethical decisions • Utility: Cost-Benefit Analysis • Rights: Determining and Protecting Entitlements • Justice: Is it fair?

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