CPA liability on the Causes

Paper Keywords: Certified Public Accountants audit liability
Abstract: In the lead up accountants liability reasons, the most important because of the audited entity and the CPA itself caused. Is mainly the responsibility of the audit unit of the error, fraud and illegal acts, and business failure, the responsibility of Certified Public Accountants mainly for breach of contract, negligence and fraud. At present, the accounting objective of the diversification of the economic consequences of accounting information and other reasons, so that the liability of CPA undergone new changes.

2o century, from the 60's, the United States and other certified public accountants audit the more developed countries, a number of investors and creditors and other users of audit reports in legal proceedings on the case of CPA, when it caused the accounting profession and the public's attention. Since 9o 2o Shiji into this Lawsuit increase, but growing number of increasingly high compensation, forcing the CPA more concerned about their legal responsibility to safeguard their own interests. In our country, In recent years, the forensic audit and other legal proceedings arising from the business more and more common, the three cases from the old ("Wilderness Company Case," "Great Wall Electrical Company Case" and "China Water International Corporation Case") to new three cases ("Joan sources Village '," Hongguang Industrial Case "and" Dongfang Boiler Case "), stir the country and more recently" Guangxia "cases, CPAs are involved in the case in which all aspects of being severely criticized . In order to reasonably respond to legal proceedings, improve the audit risk awareness, we must fully understand the CPA should bear the legal responsibility for its causes.

First, the formation of Certified Public Accountants of the root causes of liability
Lawsuit occurs, either the principal accused CPA, or be related to a third party complaint, but lead to liability reasons. Some of the audited entity (listed companies) responsibility, some responsibility for your own CPA, Some is likely to be the common responsibility of both sides, and some users of financial statements may be certified public accountants to understand the legal liability resulting from errors, as well as practicing certified public accountant with the relevant legal environment, of which the most fundamental reason is the unit being audited by the CPA's own making.

(A) the audited entity because the reasons lead to legal liability
1. Errors, fraud and illegal acts. Was submitted audited financial statements of its responsibility by the disclosure of their authenticity, legitimacy, integrity of accounting responsibilities. When the audited entity for some purpose or unintentional accounting errors in its statements, false information or material misstatement, but the implementation of CPA in the course of the audit of the audited entity not found these errors, fraud and illegal acts, and other interested parties to a third party or cause economic loss, there is others may be subject to indictment, and bear relevant legal responsibilities.

The so-called error (er s) E, is the customer's financial statements do not intend misstatement or omission, may involve the following activities: preparation of financial statements used in data collection or processing errors, negligence or misunderstanding of the facts, resulting in accounting estimate is not correct, the amount of Classification, expression or application of accounting principles disclosed in error.

The so-called fraud (ineodarities) E1J, is deliberately being audited financial statements misstatements or omissions. Including: tampering, counterfeiting or alteration of the preparation of financial statements is based on the records and accounting documents, intended to deal with the wrong amount of accounting principles, classification , presentation or disclosure.

The so-called illegal (indiaacts) uJ, refers to bribes, illegal political contributions and violated certain Laws and government rules.

The unit being audited for errors, fraud and illegal acts, the audited entity should bear the direct accountability. The only negative CPA audit responsibilities. Certified Public Accountant in the implementation of the audit process, as long as strict compliance with the requirements of independent auditing standards, should be able to exist in the financial statements of major errors, fraud and illegal check out. but because of the modern system of internal control audit is based on a sample audit, the CPA can not be audited for each of a detailed review of economic business only way to audit the use of sampling, so there must be some risk. Therefore, the CPA can not be demanding that financial statements and disclosure of all errors and omissions. Of course, this does not mean that CPAs do not have to check on the financial statements are not out of any responsibility for all matters, the key is not found the error to see whether the reasons for underreporting from the CPA itself.

2. Business failure. Also known as business failures. In a highly volatile market environment, when the investors or creditors, or lend their capital investment enterprises, faced with a certain degree of business risk. And when a business decision due failure or bankruptcy or other reasons, the bankruptcy of the huge losses suffered by investors and creditors, and this is business failure J. losses then the responsibility of the parties concerned should be attributed to the operating environment or authority to assume, with the implementation of CPA Audit no contact. The audit failure is due to CPA audit report itself, causes the user to suffer. when the parties to the loss depending on the seriousness should be undertaken by a registered accountant.

However, because some reports of failure and the use of people can not tell the difference between audit failure, coupled with investors, creditors and other interested parties to make up for their losses, always trying to find a scapegoat for their responsibility, it will also lead to legal litigation, to bear the legal responsibility of Certified Public Accountants.

(-) Result of chartered accountant due to reasons of legal liability
As certified public accountants or accounting firms own a number of reasons, such as professional competence, quality level is not high enough, in the course of their practice did not follow the independent auditing standards, or the breach of contract, negligence and fraud, that lead to customer or third party suffered economic loss , then the CPA must bear the corresponding legal responsibility.

1. Breach of contract. Breach of contract is a party or parties failing to meet contract requirements L3J. When the breach of contract caused losses to others, the CPA should be held liable for breach. Such an accounting firm in an agreed period of time, failed to submit tax returns or a violation of the agreement entered into with customers and so on.

2. Fault. Fault refers to certain conditions, the lack of people of reasonable care should have [. Evaluation of the fault of Certified Public Accountants, Certified Public Accountants is the other can be achieved under the same conditions as the standard of care. According to their degree of can be divided into ordinary negligence and gross negligence. ordinary negligence is the failure to keep proper career reasonable care. such as certified public accountants audit the project fails to achieve a specific necessary and sufficient audit evidence, and this is a common fault. gross negligence is not even the most basic care to maintain professional, business or related matters of indifference, indifference. of Certified Public Accountants, means not followed <"The Independents Auditing Standards>> or no professional standards in accordance with auditing standards . Links to Research Papers Download http://www.hi138.com 3. Fraud (also known as CPA fraud). Fraud is a deception or harm to others for the purpose of an intentional wrongful act has an ulterior motive J. is an important feature of fraud, the CPA, the fraud is deception in order to achieve The purpose of others, to seek its own interests, knowing that the audited entity's financial statements are free of material misstatement, but to be a false statement, issued unqualified audit reports.

Second, the current liability of CPA's special reason to change
CPA liability fundamental change is mainly caused by changes in socio-economic mechanism, which brought the work of certified public accountants a series of changes, but also makes the liability of certified public accountants has changed.

(A) the accounting objectives of diversification, increased audit risk
When the economic system from a planned economy to market economy on the one hand, accounting, administered by a single goal from the previous duty to diversify, both for the operation and management responsibility for services, but also for business decision making. At this point, had accounting treatment of these two species to be a balance between the requirements, thus increasing the controversy on the interpretation of accounting information. On the other hand, the market economy, the relationship between accountability for people with a lot of uncertainty, trustees and financial responsibility between the principal relationship into a two-way binding agreement between the powers and responsibilities. This equal rights, not only gave the trustees the opportunity independent of accounting information, but also enhance the commission's request to obtain reasonable assurance that the accounting information needs. which gives the accounting information The Lijie conflict foreshadowed. visible in the market economy, the economic environment changes, the complexity of the accounting information processing and the increase in different sectors of Lijie conflict will inevitably lead to audit risk. The solution of these audit risk of the most fundamental way One is to rely on legal means to regulate the mutual understanding conflict.

(B) of the market economy, the economic consequences of accounting information increased liability of audit
In the traditional planned economy, the economic consequences of accounting information and the scope is very limited, and in the market economy, the stock market makes the agent and the existence of the relationship between the trustees become uncertain, the relationship is established and lift to a large extent dependent on the accounting information to reflect the content. Therefore, the role of accounting information in decision-making becomes very important. a small error of accounting information, social capital may lead to the tens of thousands, hundreds of thousands of and even the flow of several hundred million mistake. It is because of the economic consequences of accounting information have become increasingly prominent, if not produced the economic consequences of the emergence, or identification of accounting information and use of accounting information that both sides have different views on the economic consequences of the time , will bring a legal conflict. Therefore, the economic consequences of accounting information increases, can also cause legal problems related to the audit.

(C) of the market economy, equality of the main body, strengthen the legal responsibility of each of the main
In a market economy, the Law has become a word section of the individual and society, order and freedom, authority and subject to the three conflicting criteria. The legal status of equality with the trustees that the Principal has the same economic rights. When the accounting information understand the conflict, both sides are no longer based on administrative power and level, but more is based on the original formulation of the "game rules" - legal provisions to deal with the dispute. As the protection of the rights and improve the rule of Law, making all parties With the courage and ability of self-defense law. Therefore, the use of legal means to word processing and understanding of accounting information section of the conflict, will become the market economy one of the most common means.

(D) Certified Public Accountants contradiction of the relevant legal provisions, resulting in a complicated legal responsibility
In order to clarify the legal responsibility of China Certified Public Accountants, to maintain the market economic order, the state has the introduction of the <<Penal Code >>,<< Certified Public Accountants >>,<< Law Securities Law >>,<<>> are involved with the up liability provisions of the CPA. This series of provisions to maintain operation of the market plays an important role in order. However, due to changes in the external environment, legislative time difference, making the existing law involving CPA liability provisions there are many contradictions. If Austin special legislation, it is not <<Penal Code>> object as a violation of criminal anchored to the classification requirements will lead to pursue legal responsibility scale CPA is inconsistent, uneven, and stressed that the substantive law, procedural law has brought contempt Accountants contradictions firm compensation procedure, some other explanation of judicial documents the accounting firm brought the issue of compensation and so on. These phenomena led to the CPA liability complicated.

We CPA Auditing and the production and development of legal liability can be seen, the CPA's position in economic life more and more, the increasing role, especially for a country's stability and prosperity in the stock market plays a important role. Thus, the face of emerging stock market, financial fraud, how to define and regulate the liability of certified public accountants, is not only a sound development of the industry and protect the needs of Certified Public Accountants, is a country needs economic stability and prosperity. Links http://www.hi138.com Research Papers Download