Quiz 48: Professional Liability and Accountability

Business

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Attorney Malpractice Outcome: In the case Perez v. Stern, 279 Neb. 187, 277 N.W.2d 545 (2010) the court granted summary judgment in favor Stern. The District Court granted summary judgment in favor of Stern and dismissed the complaint. The Supreme Court of Nebraska reversed the court's judgment against the claims. img The principles applied to an attorney's duty of care permit injured parties to pursue claims where the basis for an attorney's duty was clear, while preserving client authority and the interests and responsibilities associated with the attorney-client relationship. If the children had not suffered harm as a result of the malpractice, Stern still owed them a duty to perform. Under Nebraska Statute §30-810 , the only purpose of an attorney-client agreement to pursue claims for wrongful death is to benefit those persons specifically designated as statutory beneficiaries. Therefore, the result would have been the same regardless of harm sustained by the action of Stern. The additional consideration is that the children were minors, which tolled the statute of limitations on those claims.

The Untramares Rule: An accountant in violation of GAAP is considered prima facie evidence of negligence. A court may hold an accountant to a higher standard of conduct than is established by state statute. Auditors can be held liable to third parties for negligence. Under the Restatement (Second) of Torts , ultramares has evolved to include foreseen, or known, users of the audits that they produce. Under §552 of the Restatement (Second) of Torts , an accountant's liability extends to: 1. Persons who hire the accountant or will receive guidance or benefit from his/her expertise, or 2. Persons who will receive or be influenced by the information that the accountant prepares. The Sarbanes-Oxley Act of 2002 regulates corporate accounting procedures and enforces the adherence to generally accepted accounting principles (GAAP). 1. Sections 906 and 302 of Sarbanes-Oxley require the CEO and CFO to certify the accuracy and truthfulness of periodic reports. If the reports contain discrepancies, the CEO and CFO can be found criminally liable. The penalties include imprisonment of 10 to 20 years. Additionally, civil penalties can include fines of up to $5 million. Table 1 has contains a brief overview of penalties for deviant behavior: Table 1 img

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