If an accounting firm is sued for negligently preparing a faulty financial report for a company that caused significant losses by those who relied on the accounting, the accounting firm is likely to be:
A) not liable; there is no promise that results will be perfect
B) held subject to the standard of care imposed on professional parties
C) held subject to a special statutory standard of care
D) held to have violated the principles of strict liability
E) none of the other choices

Question

Quizplus · Accepted Answer

Accounting firms are held to a standard of care imposed on professional parties. This standard requires accountants to exercise a degree of skill, care, and diligence that is reasonable under the circumstances. If the accounting firm fails to meet this standard and their negligence causes significant losses to those who relied on their financial report, they can be held liable for their negligence. Strict liability does not apply in this case because it requires a showing of a defective product.

If an Accounting Firm Is Sued for Negligently Preparing a Faulty