Book Title
Business Law with UCC Applications 14th Edition

978-0077733735 Chapter 32 Lecture Notes

April 10, 2019
Chapter 32 - Professional Liability
Chapter 32
Professional Liability
I. Key Terms
Accountant (p. 787) National rule (p. 808)
Actual privity (p. 794) National standard (p. 808)
Adverse opinion (p. 789) Near-privity (p. 795)
Attorney-client privilege (p. 802) Negligence (p. 793)
Audit (p. 788) Negligent credentialing (p. 810)
Auditor (p. 788) Negligent retention (p. 811)
Certified public accountant Ostensible authority (p. 810)
(CPA) (p. 788) Professional (p. 787)
Code of Professional Ethics (p. 789) Public accountant (PA) (p. 788)
Cost of repair rule (p. 800) Public Company Accountability
Disclaimer (p. 789) Oversight Board (PCAOB) (p. 790)
General consent (p. 806) Qualified opinion (p. 789)
Generally accepted accounting Same state locality rule (p. 807)
principles (GAAP) (p. 788) Sarbanes-Oxley Act (p. 790)
Generally accepted auditing Similar locality rule (p. 807)
standards (GAAS) (p. 789) Similar practitioner rule (p. 808)
Health Insurance Portability and Staff privileges (p. 810)
Accountability Act (HIPPA) (p. 808) True locality rule (p. 807)
Informed consent (p. 806) Type one arrangement (p. 792)
In-house attorney (p. 805) Type two arrangement (p. 792)
Locality rule (p. 807) Unqualified opinion (p. 789)
Malpractice (p. 793) Work product privilege (p. 802)
II. Learning Objectives
1. Distinguish between a certified public accountant and a public accountant.
2. Explain generally accepted accounting principles and generally accepted auditing
3. Identify the types of auditing opinions that can be issued by auditors.
4. Distinguish between actual privity and near-privity in accounting.
5. Outline the registration requirements imposed on architects by the state.
6. Identify the duties that an architect owes to his or her clients.
7. Determine the duties that an attorney owes to his or her clients.
8. State the standard of care used to judge health care professionals.
9. Contrast the locality rule with the national standard.
10. Explain the limits of hospital liability for the torts of independent contractor.
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Chapter 32 - Professional Liability
III. Major Concepts
32-1 The Liability of Accountants
Accountants are business professionals who can plan, direct, and evaluate the complex
financial affairs of their clients. The most common types of accountants are certified
public accountants and public accountants. Accountants must follow generally accepted
accounting principles. Auditors must follow generally accepted auditing standards. They
must also follow the Code of Professional Ethics of the AICPA. Accountants may be
liable to both their clients and third parties. Making a determination of the extent of
liability to third parties depends on understanding the nature of actual privity and
32-2 The Liability of Architects and Attorneys
Architects and attorneys are considered professionals and are
regulated by the state. Architects may nd themselves liable to clients
and to third parties, whereas attorneys are generally responsible to
their clients alone. Both architects and attorneys must exercise due
care and skill in carrying out their professional duties.
32-3 The Liability of Health Care Providers
The term health care provider includes physicians, dentists, chiropractors, podiatrists,
nurses, nurse practitioners, nurse technicians, radiologic technologists, respiratory
therapists, and laboratory technicians. Like other professionals, health care providers
must act with the same skill, care, and level of knowledge that a reasonable health care
professional would display in a similar situation.
32-4 Hospital Liability
Hospitals can be held liable for the negligence of a physician, even if that physician is
not an employee of the hospital. The granting of staff privileges can be troublesome for
the hospital if the staff physician becomes the defendant in a malpractice lawsuit,
because the patient can sue both the physician and the hospital. Two legal theories that
have been used successfully to add the hospital to the list of defendants in a malpractice
lawsuit are ostensible authority and negligent credentialing.
IV. Outline
I. The Liability of Accountants (41-1)
A. The Regulation of Accounting and Auditing
1. An accountant is a professional who can plan, direct, and evaluate a client’s financial
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Chapter 32 - Professional Liability
2. The nature of accounting means that an accountant’s activities may have an impact on
investors who exist outside the accountant’s inner circle of clients.
3. Accountants are regulated by the state and federal government.
B. Accountant Registration
1. The regulation of accounting is part of the state’s police power.
2. Certified public accountants have met certain age, character, education, experience,
and testing requirements.
3. Public accountants are accountants that work for a variety of clients but are not
4. State registration requirements are designed to shield citizens against people who
practice accounting without the education or experience necessary to do a competent
C. Accounting and Auditing
1. Auditing
a. An audit is an examination of the financial records of an organization to
determine whether those records are a fair representation of the actual financial
health of the institution.
b. An auditor is an accountant who conducts an audit.
c. Auditors face two levels of accountability.
(a) The first level of accountability is the organization which is being audited
(b) The second level of accountability is to the investors, lenders, shareholders,
and others who rely on the financial statements made by the auditors.
2. Accounting Principles
a. An independent group known as the Financial Accounting Standards Board
(FASB) has established generally accepted accounting principles (GAAP).
b. Those rules are followed by the American Institute of Certified Public
Accountants (AICPA) and outline the procedures that accountants must use in
accumulating financial data and in preparing financial statements.
3. Auditing Standards
a. The Auditing Standards Board of the AICPA has set up generally accepted
auditing standards (GAAS).
b. There are ten auditing standards with three relating to the auditors, three related to
their work in the field, and four related to the opinions that they issue.
4. Types of Opinion
a. An auditors opinion may be unqualified or qualified.
(a) An unqualified opinion concludes that the financial records of the company
are an accurate reflection of the company’s financial status.
(b) A qualified opinion means that the books represent the company’s financial
health as of a given date.
b. Auditors may qualify an opinion in one of two ways.
(a) One type of qualified opinion is the “subject to” opinion in which auditors
state that the books represent the company’s financial health subject to some
uncertainty which may affect the company in the future.
(b) The second type of qualified opinion is an “except for” opinion in which
auditors state that the financial statements are an accurate reflection of the
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Chapter 32 - Professional Liability
company’s financial health except for some minor deviation from GAAP not
serious enough to warrant an adverse opinion.
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Chapter 32 - Professional Liability
c. An adverse opinion is rendered when the deviations from GAAP are so serious
that an unqualified opinion is impossible and a qualified opinion is not justified.
d. A disclaimer declares that the auditor has decided not to give any opinion on the
company’s financial record.
5. Ethical Rules of Accountants
a. The AICPA has established a Code of Professional Ethics outlining rules that
govern the ethical conduct of accountants.
b. Those rules are frequently used by the courts to determine whether an accountant
has breached a duty to a client in nontechnical matters not covered by GAAP and
D. The Sarbanes-Oxley Act
1. The Sarbanes-Oxley Act created the Public Company Accounting Oversight Board
a. The task of that board is to make certain that correct, unbiased, and
comprehensive data finds its way to potential investors so they can make
informed decisions about investment opportunities.
b. The board has responsibility for the supervision of public accounting firms.
2. The Act requires the registration of all public accounting firms that are involved in
auditing publicly traded corporations.
3. The Act specifically prohibits conflicts of interest that might arise when former
auditors are hired by a company and that company is still being audited by the same
firm that once employed the former auditor.
4. The Act also requires that corporate audit committees receive timely and
comprehensive reports from the accounting firm that is auditing the company.
E. Conflicting Jurisdictional Problems
1. Problems may arise when authorities that regulate auditors and accountants do not
2. Problems are also likely to arise when authorities that regulate auditors and
accountants and authorities that regulate other professionals, such as lawyers, do not
F. The Dodd-Frank Act
1. In Relation to the Accounting Profession
a. Congress included provisions in the Dodd-Frank Act for dealing with problems
peculiar to the accounting profession.
b. The Dodd-Frank Act is a complex statute covering over 2,000 pages of text.
2. Securities Exchange Commission Jurisdiction
a. The Securities and Exchange Commission (SEC) has been charged with
investigating the information that is given to investors.
b. The SEC will also look at the possibility of adding a Private Rights Action section
to the law.
3. Government Accountability Office/Public Company Accounting Oversight Board
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Chapter 32 - Professional Liability
a. The GAO has been charged with investigating how to regulate financial planners.
b. The PCAOB has been empowered to develop a plan to regulate and register
auditors of nonpublic broker dealers.
G. Duties Owed by the Accountant to the Client
1. In many accounting arrangements, the levels of interaction among the parties are
more complicated than in an ordinarily straightforward contractual arrangement.
2. Within the law of accounting, multiple overlapping duties exist.
H. Type One Accounting Arrangements
1. In a standard type one accounting arrangement, the accountant enters into an
agreement with a client as a financial manager or tax preparer.
2. If the accountant fails to fulfill the terms of the contract existing between the parties,
the client could bring a breach of contract suit.
3. An accountant might also be liable to clients under common law for negligence and
4. Negligence in Type One Arrangements
a. The duty of due care means that the accountant must perform the job with the
same skill and competence that a reasonable accounting professional would use in
the same situation.
b. Negligence, often called malpractice, occurs whenever an accountant fails to meet
his or her duty of due care.
c. Violating GAAS or GAAP may lead to a charge of malpractice.
d. Just because, however, an accountant follows the GAAS or GAAP guidelines
does not automatically lead to his or her vindication in a court of law.
5. Fraud Involving Type One Arrangements
a. If an accountant deliberately misrepresents the client’s financial condition or in
some way deliberately falsifies a statement or an auditing report, that accountant
will be liable to the client for fraud.
b. Accountants may also be liable for fraud if they compile a financial report or
conduct an audit recklessly.
c. The plaintiff must demonstrate that he or she actually relied on the false
statements or reports.
d. In these types of cases, the plaintiff may be awarded punitive damages.
I. Type Two Accounting Arrangements
1. A type two accounting arrangement arises when the accountant has a type one
arrangement with one party that leads to a type two arrangement with at least one
other party.
2. Under common law, an accountant can be held liable to some third parties who are
damaged by a negligently prepared financial statement.
3. Accountants are also liable to some third parties if they deliberately make fraudulent
4. Negligence / Malpractice and Type Two Industry Arrangements
a. Rights are not clear cut.
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Chapter 32 - Professional Liability
b. Under the Cardoza Standard, unless the parties have actual privity, that is, privity
that results from a type one accounting contract, liability for negligence (aka
malpractice) does not exist—period.
c. Under the near-privity standard in regard to negligence, the plaintiff must show
that (a) the accountant knew that the reports would be shown to a third party, (b)
the accountant knew the identity of the third party and that he or she (or it?)
would rely on the report, and (c) the accountant’s conduct revealed that he or she
had knowledge of the third party’s reliance.
d. Under the near-privity plus or specifically foreseen third-party standard in regard
to negligence, most states have extended the near-privity rule even further,
holding that accountants are also liable to the limited class of third parties that is
specifically foreseen (not just actually known but specifically foreseen) when the
financial statement is drawn up.
e. Under the near-privity plus-2 or the reasonably foreseeable third-party standard in
regard to negligence, some courts have adopted a test that depends on whether the
plaintiff in the case was foreseeable (not just foreseen but foreseeable) as a
possible recipient of the accountant’s report.
f. Some courts may be said to use a type of Platonic Stabilizing Standard in regard
to negligence that balances the various liability standards and takes into account
the individualized nature of each case.
g. An accountant who prepares a fraudulent financial statement is liable to anyone
who can be reasonably foreseen as relying on that statement.
J. An Accountant’s Statutory Liability
1. Under certain circumstances the Securities Act of 1933 allows purchasers who have
lost money after buying corporate stock based on misleading or false registration
statements to sue the accountants who prepared the statements.
2. The Securities and Exchange Act of 1934 was designed to prevent the fraudulent
filing of various documents with the SEC and the fraudulent manipulation of the
securities market.
3. Most states have also enacted statutes, referred to as blue sky laws, regulating
activities as they relate to the sale of stock.
II. The Liability of Architects and Attorneys (41-2)
A. The Liability of Architects
1. Under its police power, the state can regulate the conduct of architects.
2. An architect owes a duty to exercise due care and skill in carrying out professional
3. If a final version of a building differs from an original plan because of an error caused
by an architect’s failure to use due care and skill, the architect may have to reimburse
the client for any extra money spent to correct the error under the cost of repair rule.
4. If the design is defective and the structure is unusable for its originally intended
purpose, the court may declare that the architect owes the client the difference
between the market value of the building as it stands and the market value of the
intended structure.
5. If the architect has failed to exercise the appropriate standard of care resulting in
property damage or personal injury, then the architect may have to compensate the
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Chapter 32 - Professional Liability
B. The Liability of Attorneys
1. Attorneys are regulated by the state’s police power.
2. The American Bar Association has established a set of ethical standards entitled the
ABA Model rules of Professional Conduct which have been officially adopted in 47
3. An attorney has the duty to represent clients with good faith, loyalty, and due care or
the attorney may be liable for malpractice.
4. The attorney has the duty to act in good faith, which means that the attorney’s duty is
to act in the best interests of the client.
5. The attorney also has a duty of loyalty to protect the client and to make certain that
the client receives advice and representation that is free of conflicting interests.
6. Unless a waiver occurs, the attorney-client privilege guarantees that information that
passes between clients and their attorneys will remain secret.
7. The work product privilege protects documents and other materials prepared in
anticipation of litigation.
8. The work product privilege may be waived or a judge may rule that the other party
has a substantial need for the information and cannot obtain it in some other way.
9. An attorney owes a duty of due care to clients meaning that in performing work for a
client, an attorney must exercise the same skill and care that would be expected of
other attorneys in the same situation.
C. Steps in a Legal Malpractice Case
1. The plaintiff must first show that the attorney owed a duty to the plaintiff.
2. Second, the attorney must have breached the duty owed.
3. Third, the plaintiff must show that the attorney’s questionable behavior caused
foreseeable resulting harm to the plaintiff.
4. Finally, the plaintiff must show that he or she suffered actual harm as a result of the
attorney’s breach of duty.
5. Attorneys are rarely held liable to third parties because the attorney’s responsibilities
are tied closely with the interests of the attorney’s client and that client alone, but
there are some restrictions in relation to an attorney’s interaction with third parties.
6. There are safeguards within the legal system which are designed to make certain that
attorneys do not file phony lawsuits, promote unwarranted legal arguments, conduct
unnecessary investigations, file unjustifiable motions, or make allegations that lack
evidentiary support.
7. Attorneys are not immune to criminal liability, especially when they act in collusion
with clients.
III. The Liability of Health Care Providers (41-3)
A. The Professional Status of Health Care Providers
1. Physicians as well as other health care providers such as dentists and nurses are
considered professionals.
2. They are regulated by the state, and most are also regulated by independent
professional organizations.
B. The Health Care Standard of Care
1. To avoid liability for the intentional tort of battery, health care providers must
frequently obtain the patient’s written consent.
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Chapter 32 - Professional Liability
a. Upon entering a hospital, a patient automatically gives general consent for routine
tests and procedures; and although such consent is implied, many hospitals
require signed general consent forms.
b. When a diagnostic test or a procedure will be dangerous or painful, the treating
physician must obtain the patient’s informed consent after informing the patient
about the procedure and risks.
2. Health care providers might be vulnerable to charges of negligence if they do not
follow the appropriate standard of care.
3. To succeed in a negligence case against a health care professional, a patient must
show that the health care provider owed a duty to the patient that was breached.
4. In order to establish that the duty of care was breached, the plaintiff may refer to a
hospital’s policy and procedure manual, or to manuals or procedures used at other
5. Some states use some variation of the locality rule in determining whether the duty of
care was breached while others use a national standard.
6. A plaintiff must prove not only that the defendant’s conduct did not conform to
acceptable medical practices, but also that the failure to follow acceptable procedures
was the cause of the plaintiffs injury.
7. Expert testimony is required to establish malpractice unless the action under
examination is within the common knowledge of all people.
C. Medical Records and the Patient’s Rights
1. With some exceptions, the Health Insurance Portability and Accountability Act
(HIPAA) ensures that individuals have the right to see their medical records and that
parents have the right to see the medical records of their children.
2. The Act also provides the right to obtain duplicates of the records.
D. The Patient Protection and Affordable Care Act
1. The Department of Health and Human Services has developed trial regulations
toward the creation of a system of coordinated health care institutions for Medicare
patients known as Accountable Care Organizations (AOCs).
2. The ACO program is administered by the Center for Medicare and Medicaid
3. To be certified, a new ACO must take responsibility for at least 5000 beneficiaries for
3 years.
IV. Hospital Liability (41-4)
A. Ostensible Authority and Hospital Liability
1. Ostensible authority is created when a hospital presents itself to the public-at-large as
a provider of health care services and in some way leads the patient to believe that a
physician with staff privileges is an employee of the hospital.
2. Since such representations indicate that the physician was an employee of the
hospital, the patient can add the hospital to the malpractice suit as a defendant.
B. Negligent Credentialing by Hospital Authorities
1. Negligent credentialing occurs if the hospital has retained a physician that the
governing body of the hospital knew or should have known was incompetent.
2. Another form of negligent credentialing occurs if a previously competent physician
with staff privileges loses that competence and the hospital governing body knows or
should have known about the changed circumstances, but takes no remedial action.
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Chapter 32 - Professional Liability
C. Tort Reform and Litigation
1. In recent years some states have attempted to lessen the burden placed on hospitals by
ostensible authority and negligent credentialing.
2. Some states have statutes allowing a hospital to escape liability by posting notices
that inform patients of the independent status of staff physicians.
3. Some states have created a rebuttable presumption that says a hospital is presumed to
have properly credentialed staff physicians if the hospital is accredited by the Joint
Commission of Accreditation of Health Care Organizations.
V. Background Information
A. Cross-Cultural Notes
1. Issues involving medical malpractice very from country to country. An article titled
“Medical Malpractice: How Medical Lawsuits are Won Around the World” from the
Yale Journal of Medicine and Law is available at
2. A 2013 article by Benjamin Liebman titled “Malpractice Mobs: Medical Dispute
Resolution in China” addressing the surge in medical disputes in China and violence
involved is available from the Columbia Law Review at 113 Colum. L. Rev. 181.
Another article titled “Yinao: Protest and Violence in China’s Medical Sector”
addressing the issue is available from the Berkeley Journal of Sociology at
B. Historical Notes
1. While practicing law with his partner in Springfield, Illinois, Abraham Lincoln was
approached by a potential client who wished to press a claim involving a promissory
note against a widow. Before taking the case, Lincoln investigated the circumstances,
discovering that if his client won, it would financially ruin a widow and her six
children. Lincoln wrote the following refusal: “We shall not take your case, though
we can doubtless gain it for you. Some things that are right legally are not right
morally. But we will give you some advice for which we will charge nothing. We
advise a sprightly, energetic man like you to try your hand at making six hundred
dollars in some other way.”
2. Stephen Smith, one of the leaders of nineteenth-century American medicine, stated in
1860 that it was ludicrous “in our time when communication is so rapid, and books
and periodicals are abundant and cheap,” for a doctor to plead ignorance of generally
recognized medical knowledge.
C. State Variations
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Chapter 32 - Professional Liability
1. In Nebraska, no partnership or limited liability company may use the title or
designation, “Certified Public Account” or “CPA,” unless such partnership or limited
liability company is registered with the state and is issued a permit which is not
revoked or suspended. Notification is to be given to the board regarding the
admission to or withdrawal of a partner from any partnership or a member from any
limited liability company that is registered.
2. Louisiana, Michigan, and Missouri are some of the states that have adopted
Restatement (Second) of Torts section 552, whereby negligent accountants are liable
to specifically foreseen and limited classes of persons for identifiable transactions.
3. The term “blue sky laws” comes from the words of a Kansas Supreme Court Justice
who wanted to protect investors from ventures with no more basis than “so many feet
of blue sky.” All states have state securities regulators. For more information on
state blue sky laws see “Did You Know…? Facts About Blue Sky Laws” available at
the FindLaw website at
D. Quotations
1. Neglect of duty does not cease by repetition to be neglect of duty.
— Lord Thomas J. C. Tomlin (1736–1812). British jurist
VI. Terms
1. The intent to mislead is often referred to by courts as scienter, Latin for “knowingly.”
VII. Related Cases
1. Florida required that all people sitting for the CPA exam be a resident for two years
before the exam. An applicant sued the state and won, the court ruling that the
two-year residency requirement was void and unreasonable. Mercer v. Hemmings,
170 So.2d 33 (Fl. 1964).
2. A Mississippi statute restricting the preparation of tax returns for compensation to
CPAs was held void as an unconstitutional exercise of police powers in Moore v.
Grillis, 39 So.2d 505 (Miss. 1949).
3. Dr. Thomas advised Truman to get a Pap smear but did not warn her of the dangers of
failure to have the test. The patient eventually developed cervical cancer and died.
Truman’s husband brought a wrongful death action against the doctor, arguing that he
had failed to disclose all the risks of not having the test. In Truman v. Thomas, 611
P.2d 902(Cal. 1980), the California Supreme Court held that the doctor should have
given the patient all “information material to her decision.” However, the court
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Chapter 32 - Professional Liability
remanded the case to the trial level so that a jury could determine whether the
consequences of failure to have a Pap smear were so well known that the doctor had
no general duty to disclose the risks to all patients.
4. In Vincent v. Devries, 193 Vt. 574 (2013), the Supreme Court of Vermont refused to
award damages for emotional distress in a legal malpractice action. The underlying
case involved a situation in which the defending lawyers client, the plaintiff in the
legal malpractice action, was attempting to avoid an alleged contract for the sale of
his home. The court assumed without deciding that Vermont law would follow a
modern trend of allowing damages for serious emotional distress in certain legal
malpractice situations and that the evidence in the case supported a claim for serious
emotional distress. The court went on to conclude, however, that the subject of the
defending lawyers representation of the plaintiff was not of the personal and
emotional nature type that would support an exception to the general rule of
disallowing recovery of emotional distress damages in the absence of physical
impact, substantial bodily injury, or sickness.
VIII. Teaching Tips and Additional Resources
1. The American Institute of Certified Public Accountants has a section addressing
disciplinary actions taken against accountants at
2. Extensive information from the U.S. Department of Health and Human Services
regarding the National Practitioner Databank, the database at which information is
collected regarding negative information on health care practitioners, including
malpractice awards, can be found at http://www.npdb-hipdb.hrsa.gov/.
3. The American Medical Association provides information about professional liability
cases at
4. Discuss the legal implications of admissions and ask students their opinions on
whether physicians or other professionals who have made an error should apologize.
An interesting recent article titled “Explain a Medical Error? Sure. Apologize Too?”
from the Internet site of The New York Times is available at
Another article titled “Medical Errors Are Hard for Doctors to Admit, but It’s Wise to
Apologize to Patients” is available from The Washington Post at
2-9abd-e4c5c9dc5e90_story.html. What do students think about apologies in other
professions such as accounting, law, and the building professions?
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Chapter 32 - Professional Liability
5. Ask students to research whether disciplinary actions against physicians in their home
states are reported online. For example, disciplinary actions against health
professionals in Tennessee can be researched at https://apps.health.tn.gov/Licensure/.
6. The Internet site of the Public Company Accounting Oversight Board with detailed
information regarding the board is available at http://pcaobus.org/Pages/default.aspx.
7. The American Institute of Architects has information regarding the field available on
its web site including a list of questions to address when meeting with a potential
architect at http://www.aia.org/components/media/AIAB028900?
8. The Internet site for the American Hospital Association is at
http://www.aha.org/about/index.shtml. By clicking the tab “ Advocacy Issues”
extensive information regarding current issues on health care of interest to hospitals is
9. The United States Department of Health and Human Services has extensive
information regarding the Health Insurance Portability and Accountability act
(HIPAA) available at http://www.hhs.gov/ocr/privacy/.
10. The American Bar Association shows common legal malpractice claims at
11. The Illinois Bar Journal reports “Lawyer Sues after His YouTube Post of Client
Leads to Suspension” at
Interestingly, the article reports that the attorney was found to have violated ethics
rules for posting a video of his client with the caption “Cops and Task Force Planting
Drugs.” The attorney involved testified that he initially thought the video showed
police planting drugs on his client. On closer examination, however, he realized it
showed his client had sold drugs to an undercover officer.
12. ABC news provides information on Bernie Madoff and other associated with the
scheme at a site titled “Anniversary Behind Bars: Where Are Bernie Madoffs
Insiders?” at
13. Assign a short research paper on the regulations in your state for accountant
registration. Have students include in their reports the state requirements for CPAs
and public accountants.
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Chapter 32 - Professional Liability
14. The AICPA and many accountants argue that, in lawsuits against accountants, courts
should not expect higher standards of conduct from the defendants than those
customary in the profession or than those of the GAAP and GAAS.
However, plaintiffs’ lawyers often successfully argue that professional standards and
customs are only admissible, not conclusive, evidence, and most courts do not
hesitate to require a higher standard of conduct than that established by the GAAP
and GAAS.
15. A large percentage of all CPAs in the United States are members of the AICPA and
thus are subject to its discipline standards. Since 1975, the AICPA has jointly operated
ethics enforcement with the state societies of CPAs.
16. Discuss the nature of a fiduciary relationship with students. Remind them that the
relationship between an accountant and a client is a fiduciary relationship. Then
discuss why the statements of persons in a fiduciary relationship are actionable.
17. The American Bar Association has nearly 400,000 members with a large
administrative staff and budget.
18. Assign a short research paper on the legal requirements for becoming a health care
professional in your state. Students may choose a specialty from any of the health
care professions.
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