Question

1. How can an accountant be held criminally liable?

2.Find a case that deals with an accountant that has been found criminally liable. Provide a brief summary of the facts of the case, and provide the court's analysis. Be sure to use a reference.

Answer 1

How can an accountant be held criminally liable- An Accountant ( CPA) may be liable for damaged based upon common law , statutory law . CPA fail to modify the audit report on financial statement that are materially misstated , investor and firm creditors may experience substantial losses

Breach of contract , Negligence of professional which represents failure to exercise due professional care

Fraud – this is defined to be a misrepresentation of material fact by accountant with the intention of misleading the other party

Damages – the accountant negligence result in some sort of damage to the result .

Find a case that deals with an accountant that has been found criminally liable. Provide a brief summary of the facts of the case, and provide the court's analysis. Be sure to use a reference    

Accountant commits securities Fraud by Failing to correct financial Problem – case study

Summary – Appeal court held that an investor presented sufficient evidence of losses incurred when he relied on audited financial Statement that contain errors for years . Failure to correct the problem can make the auditor liable for Investor losses

Facts of the case – Todman & Co audited the financial statements of broker dealer Direct broking for several years . Todman stated that the statement accurately reflected the financial condition of the company , in fact it failed to uncover payroll tax liability .

Overton sued Todman for securities fraud , contending of investment $500k + loan amount of $ 1.5 Mio

Decision – An accountant violate the “ duty to correct “ and became liable under federal securities law. Accountant fails to take reasonable step to correct or withdrawal statement .

Accountant keep on providing statement which was false and misleading .