Jiang, an accountant, is assigned by Wanley Inc. to perform an audit and prepare an annual report for its shareholders. Jiang fails to execute his duty with sincerity as he fails to discover embezzlement by a chief accountant of the firm, which is later discovered by the firm's creditors. In this scenario, Jiang's breach of duty might also trigger an action in breach of the contract between Jiang and Wanley Inc. because:

Question

Quizplus · Accepted Answer

The main basis of liability for accountants is the duty to exercise ordinary skill and care. Breach of this duty may lead to an action grounded in the tort of negligence. Closely related are the suits stemming from the agency relationship between the accountant and the client. As this relationship is contractual in nature, breach of the duty might also trigger an action in breach of contract. In the above case, Jiang failed to execute his duty with sincerity as he did not discover embezzlement by a chief accountant of the firm. Hence, his breach of duty might also trigger an action in breach of contract.

Jiang, an Accountant, Is Assigned by Wanley Inc