Accountant Liability Research Articles

Causes of the Exorbitant Accountant Liability for False Financial Statements: Comment on the Civil Judgment of the Taipei District Court 110 Jin-Zi No. 32

Causes of the Exorbitant Accountant Liability for False Financial Statements: Comment on the Civil Judgment of the Taipei District Court 110 Jin-Zi No. 32

Discuss on the Criminal Liability of Accountants for Corporate Fraudulent Financial Reports

Discuss on the Criminal Liability of Accountants for Corporate Fraudulent Financial Reports

Pengaruh Komisaris Independen Dan Kepemilikan Institusional Terhadap Konservatisme Akuntansi Pada Perusahaan BUMN

Accounting conservatism is a precautionary principle at the time of financial reporting so that companies are not in a hurry when recognizing and assessing assets and profits so that they can immediately recognize possible losses and debts that may occur, value assets with the lowest value, and take into account liabilities with the highest value. The application of conservatism in making financial statements, an investor can view financial statements transparently and without any element of manipulation contained in the financial statements, because the concept of conservatism is recognizing all losses and recognizing profits only when the profits actually occur. Accounting conservatism is a concept that recognizes expenses and liabilities directly even though there is uncertainty about the outcome, but only recognizes revenues and assets when they are actually received. This study aims to obtain empirical evidence of the effect of independent commissioners and institutional ownership on accounting conservatism. This research is classified as quantitative research. The population in this study are state-owned companies listed on the Indonesia Stock Exchange in 2019-2021. The sampling method used is purposive sampling. The analytical method used is panel data analysis. The number of sample companies used are 17 state-owned companies in a span of 3 years, so the final data used is 51 observational data. The results show that 1) Independent Commissioner has a positive effect on accounting conservatism 2)Institutional ownership has no effect on accounting conservatism

THE IMPACT OF THE SUPREME COURT’S OMNICARE DECISION ON AUDITED FINANCIAL STATEMENT DISCLOSURE

Since the enactment of the Securities Act of 1933 and 1934, both the legal system and the accounting profession have struggled with the question, “to what extent accountants should rely on the statements of other accounting and non-accounting experts and when should they include parts of expert’s written statements in financial statement disclosures.” The Supreme Court considered this issue in Omnicare v. Laborers District Council Construction Industry Pension Fund (2015) (hereafter, Omnicare). The Omnicare decision refined the expectations of preparers and external auditors working on prospectuses for U.S. registrants. Omnicare considered disclosures in Omnicare’s registration statement regarding their opinions of their perceived compliance with federal regulations and laws. After Omnicare was charged with violations, the Court considered when opinions in registration statements could be treated as misstatements of material fact that could lead to accountant liability. The clarification to accounting disclosures is important for limiting liability for future registrants as well as for auditors who express an audit opinion on financial statements contained in registration statements. Omnicare created a new rational basis test which is precedential to future cases deciding whether an opinion statement included in a registration statement becomes a misstatement of fact or the lack of an opinion statement constitutes a material omission. Therefore, the rational basis test should be considered by accountants in preparing and auditing registration and post-registration statements, and this article contributes to the accounting and auditing literature by providing new suggested language for incorporation into SEC guidelines and/or PCAOB standards going forward.

ПРИПЛИВ ІНОЗЕМНИХ ІНВЕСТИЦІЙ ЯК ЧИННИК РОЗВИТКУ ІНДІЇ

With the transformation of international capital markets, developing countries have become recipients of significant inflows of foreign direct investment (FDI). In recent decades, India has shown the highest growth rate of FDI stock among the BRICS countries. The inflow of foreign capital has become a determining factor of economic development in many countries. Therefore, the aim of this study was to analyze the impact of foreign capital inflows in the form of FDI on the Indian economy during 2000-2020 years. Specifically this period was chosen for the research because it is characterized by the intensification of investment flows to the country. The article analyzes the dynamics, structure, sectoral and regional distribution of FDI flows to India. The results of investment activities of non-residents in the country were also considered in the study. Dividends and withdrawals from income of quasi corporations were found to have increased to record levels in recent years. Investment income payments to non-residents are small relative to total current account liabilities. However, if this trend intensifies, it will negatively affect the current account, which has constantly remained in deficit over the past decade. To determine the role of foreign capital in the economic development of India, a number of regression models were built. Regression analysis of selected items of the current account was carried out to determine the existence of a relationship between FDI flows and the state of the country’s balance of payments. The results of the study confirmed the existence of a significant relationship between FDI and exports, imports and payments of investment income to non-residents. It was also found that FDI inflows contribute more to the formation of export than import. To assess the impact of FDI on India’s economic growth, a regression model for the formation of GDP was built based on the Cobb-Douglas production function. The regression analysis of India’s GDP confirmed a significant positive dependence of GDP on FDI, but showed that foreign capital plays a relatively modest role in the country’s economic growth.

Sweatshops, Harm and Exploitation: A Proposal to Operationalise the Model of Structural Injustice

In this article, I firstly discuss the person-affecting view of harm, distinguishing between the liability and the structural models of responsibility, and also explaining why it is unsatisfactory, from a moral point of view, to interpret a given harm as a loss with respect to a diachronic baseline. Then, I take sweatshops as an example and I entertain two further issues that are related to the assessment of harm and that are necessary for operationalising a comprehensive model of responsibility, that takes into account both liability and structural injustice. The first one is how to interpret harm when it is coexistent with a diachronic benefit and/or the parties involved in the social structures leading to harm seek to unload their responsibility by hiding behind a cooperative deadlock. The second one is how far along the chain of actions leading to harm can structural responsibility be extended.

The Range of Tax Accountant Liability

The Range of Tax Accountant Liability

Asset allocation strategies in the presence of liability constraints

The performance of portfolio managers is usually assessed by comparing their allocation strategies to a benchmark portfolio. A major issue for portfolio managers of liability driven institutions is that no benchmark is given to them, although they face mid-term objectives with short term constraints. No performance attribution methodology may then be used to serve as a reference. Assessing the performance of the asset manager as an agent, represents a major stake for the institution as a principal delegating a mandate of asset management. We propose an optimal asset allocation approach taking into account liability constraints to build a benchmark. This benchmark will be used to compare the ex-post effective performance of the asset manager to the effective performance of the ex-ante optimal dynamic asset allocation.

Liability of Persons of Unsound Mind: Incentives for Choosing Activity Level. An Economic Analysis of the Law.

The aim of this paper is to demonstrate that liability on the part of a person of unsound mind in respect of an act committed by that person does not alter incentives to act by reason of the fact that when this person commits the unlawful act, he is not in possession of all their faculties. Regulations providing for liability on the part of the person of unsound mind in the choice of the activity level when he is in possession of all the faculties would have the effect of acting as a disincentive to conduct which is inefficiently harmful, as the person, when choosing his level of activity, would take into account the risk of liability in cases where he commits an unlawful act. Liability linked to the choice of level of activity would act as a disincentive to excessive risks of harmful events.The proposal made by some academic researchers whereby indemnification must take into account the age and the severity of the incapacitation would induce people who are not, in a certain moment, of unsound mind to choose their level of activity, taking into account liabilities they may face. A law which links the indemnification that injurer must pay when he is of unsound mind to age and severity of incapacitation acts as a disincentive to the choice of excessively high levels of activity and therefore excessive risks, and favours efficiency.

DARM and DALM, Generalized Portfolio Insurance for Asset Only and Asset Liability Approaches

The literature around portfolio insurance is quite prolific. From the CPPI to the TIPP, the TPPI and the Dynamic Core Satellite, research has been done in different directions, to solve the pitfalls of the initial CPPI.This paper brings together the different research fields in the domain and proposes a generalized form of portfolio insurance that we call DARM (Dynamic Asset and Risk Management). In this generalized form, we go from two to n asset classes by embedding several TPPI structures. This new form of portfolio insurance that accounts for diversification, allows for a severe decrease of the monetization probability, along with an improved expected return.After an initial application to the asset only world, we have extended the research to the presence of liabilities, in a Defined Contributions setting. In this generalized form of portfolio insurance that takes into account liabilities, that we call DALM (Dynamic Asset and Liability management), the risk measure takes into account the funding ratio and the risk free asset is a liability-hedging portfolio. The paper is organized as follows: in the first part, we review the advances made in portfolio insurance. The second part presents a generalized form of portfolio insurance, called DARM and its extension to the presence of liabilities. In the third part, we present a case study of DALM construction for a DC pension fund. The last part concludes.

El trilema de la política monetaria en Colombia no se cumple

<p align="justify">El artículo hace una presentación de la política monetaria y cambiaria en Colombia durante la última década con énfasis en el posible cumplimiento del trilema monetario, el cual establece que la principal implicación de la política monetaria es determinar una tasa de cambio deseable para lograr los propósitos del comercio internacional; una tasa de interés apetecible para incentivar la actividad productiva, y una mayor movilidad de capitales compatible con el funcionamiento de la meta inflación objetivo. De otra parte, se verificará la imposibilidad del trilema considerando la paridad descubierta de las tasas de interés en un ambiente macroeconómico caracterizado por una tasa de cam- bio flexible, pero revaluada, una baja tasa de interés doméstica y una incertidumbre del mercado financiero internacional, lo cual se ha reflejado en un aumento de los saldos de la cuenta de capital y financiera, especialmente los pasivos, y en un mayor déficit de la cuenta corriente.</p>

Controlling The Moral Hazard Created By Limiting Liability

<span>Accounting firms may choose to organize either as Limited Liability Companies (LLC) or as Limited Liability Partnerships (LLP) to eliminate joint and several liability for their partners. However, before firms consider adopting either new entity form to limit tortuous liability, the moral hazard problem associated with these entity choices should be evaluated. This article examines the issue of accountant liability and offers suggestions to reduce moral hazard while still protecting the accountant from personal liability.</span>

Fair Valuation of Various Participation Schemes in Life Insurance

Fair valuation is becoming a major concern for actuaries, especially in the perspective of IAS norms. One of the key aspects in this context is the simultaneous analysis of assets and liabilities in any sound actuarial valuation. The aim of this paper is to illustrate these concepts, by comparing three common ways of giving bonus in life insurance with profit: reversionary, cash or terminal. For each participation scheme, we compute the fair value of the contract taking into account liability parameters (guaranteed interest rate and participation level) as well as asset parameters (market conditions and investment strategy). We find some equilibrium conditions between all those coefficients and compare, from an analytical and numerical point of view, the systems of bonus. Developments are made first in the classical binomial model and then extended in a Black and Scholes economy.

Fair Valuation of Various Participation Schemes in Life Insurance

Fair valuation is becoming a major concern for actuaries, especially in the perspective of IAS norms. One of the key aspects in this context is the simultaneous analysis of assets and liabilities in any sound actuarial valuation. The aim of this paper is to illustrate these concepts, by comparing three common ways of giving bonus in life insurance with profit: reversionary, cash or terminal. For each participation scheme, we compute the fair value of the contract taking into account liability parameters (guaranteed interest rate and participation level) as well as asset parameters (market conditions and investment strategy). We find some equilibrium conditions between all those coefficients and compare, from an analytical and numerical point of view, the systems of bonus. Developments are made first in the classical binomial model and then extended in a Black and Scholes economy.

Liability of Accountants for Negligent Auditing: Doctrine, Policy, and Ideology

This article presents a comprehensive description of the law of auditor liability. It begins by summarizing the audit process and the history of auditor liability. The article then describes the state of the law in every jurisdiction. Auditor liability is a particularly interesting doctrinal problem because of the diversity of approaches to liability. The diversity of approaches among the jurisdictions inevitably seeks resolution, a resolution that would provide the correct or the better rule. This article provides neither of those. It does, however, frame the issue in several ways that makes the process of selecting an answer or rule more accessible. The article lays out the policy analysis of auditor liability. The analysis begins with consensus treatment of a paradigm case of liability, but then it splits into two approaches that reach different results in situations beyond the paradigm case. Finally, the article considers possible means of reconciling those positions and, in light of the difficulty of doing so, relates the auditor liability issue to broader questions in modern private law.

The liability of accountants and auditors under the Federal Securities Acts and the Racketeer Influenced and Corrupt Organizations Act in the USA

Shows how the Securities and Exchange Act and the Racketeer Influenced and Corrupt Organizations Act 1970 (RICO) in the USA impose additional burdens on auditors in the detection of accounting errors, irregularities and fraud, compared with other countries like the UK; this is in addition to the generally high levels of US litigation against professional people because of factors like contingency based legal fees, class actions, and jury trials. Outlines the history of protection of investors by law since the stock market crash of 1929, the Acts’ provisions, and cases arising from them: the Securities Act is concerned with disclosure, and the Exchange Act with trading in securities. Moves on to the provisions of the RICO, which makes accountants criminally liable for mail and securities fraud and for knowingly issuing negligent audit reports, arguing that the original intentions of the Act have widened so far that accountants have become insurers of business failures at triple the losses suffered by the businesses.

Holding Accountants Accountable: The Liability of Accountants to Third Parties

The Sarbanes-Oxley Act of 2002 enhances criminal penalties for accounting and auditing improprieties as part of an overall effort to prevent a repetition of the considerable harm caused by inaccurate and fraudulently prepared corporate financial statements. This paper focuses on the liability of accountants in situations where third parties are harmed by reliance on financial statements that are negligently, albeit not fraudulently, prepared. A review of legal theory is followed by a description of other trends influencing the accountability of the accounting profession.

At the interface of the electronic frontier and the law: the international legal environment for systems reliability assurance services

In response to concerns about unreliable information systems, the American Institute of Certified Public Accountants (AICPA) and the Canadian Institute of Chartered Accountants (CICA) have launched a new assurance service called SysTrust. The objective of a SysTrust engagement is for the practitioner to issue an attestation/assurance report on system(s) reliability. The development and deployment of the CPA/CA SysTrust service, however, is done in a high litigation risk environment, especially in the United States, Canada, Australia, New Zealand, and the United Kingdom. Our purpose is to evaluate the legal environment in these five nations so CAs and CPAs can comprehend the issues involving potential litigation prior to initiating SysTrust engagements. Presently, no legal case in the U.S., Canada, Australia, New Zealand, and the United Kingdom has yet been reported which addresses directly accountant liability to third parties for negligent information system assurance services. An analysis of related legal cases sheds light on the potential liability of SysTrust providers. However, the current international legal environment is characterized by a high level of uncertainty. Several risk management strategies, including risk exposure analysis, client engagement evaluation, engagement letters, loss-limit clauses, and alternative dispute resolution, are presented that SysTrust providers may implement to minimize litigation risk.

Three's a crowd: An examination of state statutes and court decisions that narrow accountant liability to third parties for negligence

Abstract The last 30 years have witnessed a surge in litigation against public accounting firms. Accounting firms and the profession itself have taken a proactive stance to mitigate the effects of litigation. One step taken has been to mount a campaign aimed at legal reform that would level the playing field upon which liability claims are resolved. Despite the passage of recent federal reform legislation, however, accountants have continued to confront significant liability from cases based on state tort theories, especially negligence. The positive signal for accountants, however, is that a trend has emerged at the state level, both legislatively and judicially, toward a narrower scope of accountant liability to nonclients for negligence. This article outlines and analyzes state court decisions and statutes that have slowed or reversed the expansion of accountant liability to third parties for negligence. Also, this trend is examined in light of the varying legal standards used by the states in determining which third parties have a right to sue accountants for negligent misrepresentation.

The Liability of Accountants and Auditors to Third Parties for Negligent Advice Or Information—From Caparo To Esanda!

ABSTRACT This paper mainly focuses on the potential liability of accountants and auditors under the common law of negligence for careless advice or information which causes economic loss to third parties who were not the intended users of such advice. While there is no doubt that an accountant owes a duty of care where advice or information is supplied in a serious context to an identified or identifiable individual or class for their intended use, does such liability extend beyond the intended user? This paper provides a matrix for determining vulnerability to suit in any circumstance of potential economic loss to third parties beyond the intended recipient.