[REG] CPA's liability

Duty to act with reasonable care: client + any person or limited foreseeable class of  persons who the CPA knows will be relying on the CPA's work

 

1. Corp > CPA

   - Breach of contract

   - Torts: Negligence < Gross negligence ≓ constructive fraud < reckless disregards ≓ fraud

 

2. 3rd party

- Torts

Foreseen(known party) 기존채권자 negligence gross negligence constructive fraud fraud

Foreseeable party(미래채권자) Gross negligence contractive fraud Fraud

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Legal liabilities

 

Contract principles

prepare the tax return diligently and competently

 

Tort principles

professional has a duty to exercise the level of skill

Unintentional tort - ordinary negligence - Lacks reasonable care(recklessly misstates material facts) - compensatory damages(reasonable foreseeable) only	Intentional torts(fraud) - constructive fraud, gross negligence - compensatory damages + punitive damages - Elements
Elements 1) Duty( duty of care) 2) Breach of duty ( lack of due care) 3) Causation = proximate cause = foreseeable cause 4) Damage = injury	Elements 1) Misrepresentation of material fact 2) Actual and justifiable reliance by the plaintiff 3) intent to induce plaintiff's reliance 4) Damages 5) Scienter, acted in bad faith
Defense > Due diligence(document everything in the work papers) > Element하나라도 증명필패 > Audit의 경우 GAAS에 따라 진행(Good faith) > 너도 잘못이 있음, contributory/comparative negligence > 위험감수 assumption of risk	Defense > lack of scienter, acted in good faith

 

Level of Fault

1. reasonable care, due care	no negligence = not liable	no attempt	Civil
2. Lack of reasonable care	Gross negligence	no attempt	Civil
3. Lack of even slight care	Gross negligence, constructive fraud	no attempt	Civil
4. Actual Fraud	Fraud	Actual intent to deceive	Civil
5. Criminal fraud	Fraud	Actual intent to deceive	Criminal