The Accounting Review Vol. 37 No. 3 1962
A PROPHETIC ANALOGY?
Abstract
The public accountant sells his services to a client and these services usually resulting a product, the accountant's opinion. The client, as the accountant knows and expects, passes this opinion on to the ultimate consumer. Admittedly, there is no specific consideration flowing from the ultimate consumer to the public accountant. Certainly, however, there is an implied consideration and its nature is evident in the actions against public accountants that have come to trial. In many of the cases, the third party refused to extend credit or to make investments in client companies until such time as he had received the accountant's opinion on the client's financial statements. An illustration of the type of defense that would be available against an allegation of negligence can be found by referring again to the law governing a manufacturer's responsibility. In a fairly recent case, a manufacturer was held not liable for his failure to discover certain defects in an airplane motor part because he could prove that he had adhered to the generally accepted method of testing these parts as required by the Civil Aeronautics Administration. Thus, the public accountant could rebut the allegation of negligence by showing that he had adhered to generally accepted standards of conduct as enunciated by a recognized authority.
- DOI
- 10.2308/tar-7098852
- Volume
- 37
- Issue
- 3
- Pages
- 502-505
- Language
- en
- Sources
- openalex crossref