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Accounting Regulations EssayAccountant Responsibilities By Jennifer Koppelman March 11, 2014 Accountant Responsibility Accountants run through responsibilities to mevery different groups such as their lymph nodes, the government and terzetto parties. It is important that controls act in a particular manner and rent high ethical standards, integrity and master keyism. Accountants job certificate of indebtedness is to validate pecuniary countryments and perform the duties in accordance with alone the principles, standards and laws.Even though an accountant is employ by a comp both, they charter a responsibility to many another(prenominal) more people than just the company. well-nigh of the people that accountants are responsible to, would be the companys management, investors, creditors, outside regulatory bodies, and the integrity of the monetary markets. Accountants desire to be consistent and constantly be carefully exercising referable diligence and pay close shape of the materiality of content (Accountant Responsibility). Accountants pack a code of professional grapple that they should adhere to.This body politics that accountants should maintain objectiveness and be free of conflicts of interest in the discharging professional responsibilities. An accountant in macrocosm practice should be independent in fact and appearance when providing visit and other attestation services. Situations where accountants will need to manifest objectivity would be when they are felt compelled to deliver bad news to a thickening or employer based on an analysis that they had performed (Colson, 2004). on that point are two different types of auditors internal auditors and external auditors which have different responsibilities.Internal auditors have the main responsibility to develop statements that present the monetary situation of a company in a fair way, meaning that as much disclosure as necessity to give a reasonable picture of the financi al situation to any user having a arrogate to the association. External auditors responsibility is to affirm that this has happened by issuing an opinion as to whether the financial statement fairly presents the financial position of that corporation (Duska, 2005). Accountant Responsibility to Clients Accountants have a professional responsibility to thickenings to have their study confidential.The rule states that a member in the public practice shall not debunk any confidential client information without the specific consent of the client. This also extends to other accountants not directly involved with the client who obtain information through practice criticisms or sanctioned disciplinary hearings to maintain confidentially. There are certain exceptions that facilitate compliance with other professional and good obligations. Maintaining confidentiality is not only a professional obligation only also a legal obligation.General knowledge and expertise obtained through a client interest is not considered to be confidential information (Cashell). Accountants have ethical responsibility to protect their clients, produce financial statements and tax returns that are to the best of their ability afterward performing proper due diligence. If there was an event that an audit would occur for a government spot they should represent their clients with professionalism. Accountants should always maintain the highest ethical standards. Accountants perform essential and critical roles in society.Accountants have responsibilities to all of those who use their professional services. The Ameri lav Institution of certified public accountants has an official rule, Rule 301 states a member in the public practice shall not disclose any confidential information without the specific consent of the client. Accountants number one responsibility is to its clients, it is important that accountants do not disclose client information to anyone without the clients permissio n first. There are consequences to the accountant if they do not keep client information confidential.It poop also have a negative effect on the clients business, which will negatively simulate the accountant also (ET Section 301 Client Confidential Information). CPA Responsibility to Clients Case Even when an accountant has the intention to warn others of pending financial harm the costs have held that accountants must not give any client information, client information should always perch confidential. In a gaucherie Wagenheim v. horse parsley administer Co the court ruled that Alexander subsidisation improperly divulged confidential information about their client, Consolidata data run, to other clients.Consolidata Data Services, an audit client of Alexander Grant performed payroll services for several of Alexander Grants other clients. Alexander Grant discovered that Consolidata Data Services was having financial difficulty Alexander Grant warned their other clients to stop doing business with Consolidata Data Services. Alexander Grant argued that the other clients would suffer financial defame without warning them. The ruling was against Alexander Grant, the court said that there was no proof that Consolidata Data Services was in a financial hardship that they could not recover from.Which Alexander Grant had no legal right to inform trinity parties of the financial burden that Consolidata Data Services was in (Cashell, 1995). It is important that accountants keep client information confidential at all times. The accountant might not know the self-colored picture of a business and a company can state that they could have recovered from the financial burden but because the accountant may have told other clients that could ruin the reputation of the client and chance upon the business. It is always safer not to say anything in regards to the financial situations when you have an obligation to your client.Accountant Responsibility to trine Part ies Accountants do not have as much liability to third parties as they do to clients. Accountants have a liability to third parties who are relying on the audit information, only if there is fraudulent conduct or proof of negligence would they be liable to the third party. When public accountants are done with an audit of their clients records and financials they put an opinion letter which sets forth, among other things, the scope of the audit and a professional opinion concerning the financial representations.Even though third parties may rely and act upon the auditors opinion, the auditor is contractually bond only to the client and usually owes nothing, no legal duty to third parties for negligence (Greene, 2003). Accountants need to be very careful when warning outsiders of a clients fraud. Based on front court cases, CPAs generally do not have an obligation to inform outsiders of known fraud unless if they remain silent they are becoming culpable themselves. It is a risky sit uation if an accountant decides to blow the let the cat out of the bag (Cashell, 1995).Accountants are generally not responsible to third parties in contracts because there is no privity of contract. However, accountants can be held to be a common law duty of care towards third parties in certain circumstances, contempt that there is no contractual duties. Circumstances that give rise to such duty have been considered in a substantial number of cases in recent years and three general tests have been developed. wiz of the tests would be if there is foreseeability damage, proximity between parties and considerations of justice and reasonableness.Another test would be testing the assumptions of reasonability. If the court would take an incremental approach in comparing the relationship in any given case to previously decided cases in which a duty of care had been recognized or rejected. An accountant can be liable to a third party if the accountant knew or should have known that the y were relying on the audit, only for fraudulent conduct and proof of mere negligence is not sufficient. If the accountant knew that the audit give notice (of) for the client was intended to supply the information to a third party who would rely on the information.If the third party would be relying on the information in a decision concerning transactions involving the client and the third party (Professional Liability of Accountants Auditors). Duty to Disclose to Third Parties In some cases information should be unwrap to third parties but an accountant needs to be very careful and proceed accordingly. If it is detailed in their engagement letter, which is a written agreement to perform services in exchange for compensation whence an accountant has a duty to disclose information.Once the letter is signed off on by an officer then the letter serves as a contract (Engagement Letter). In one case store of shops Ltd. v. Arthur Andersen Co. the CPA had a duty to disclose. Arthur A ndersen was the auditor for two clients, Fund of Funds and power Resources Corp. King Resources Corp developed natural resource properties and agreed to be the sole vendor of such properties to Fund of Funds at prices no high than those charged to King Resource Corp industrial clients.Arthur Andersen well-educated the agreement was not being met but failed to inform Fund of Funds. The court did rule that Arthur Andersen should have let on this fact to Fund of Funds because they had knowledge of the overcharges, knew the terms of the agreement that was being violated and the language of their engagement letter produced a contractual obligation to reveal that information. Another case involving duty to disclose, this one a CPA was found that he did not have a duty to disclose information.The case princely v DCL Inc. , Price Waterhouse Co. informed DCL in December that they intended to qualify their audit report on DCLs financial statements. DCL was in the business of leasing com puters and Price Waterhouse believed that their ability to recover their computer equipment costs was impaired due to the impending relax of a new line of more powerful computers by IBM. In February, DCL inform earnings without mentioning Price Waterhouses concern and on February 15 Price Waterhouse was replaced.The court ruled that there was no basis in principle or authority for extending an auditors duty to disclose beyond cases where the auditor is big(p) or has given some representation or certification and the silence and inaction of the defendants auditors did not extend to them culpable. The courts reasoning that the CPA did not have to disclose was because the auditors had issued no public opinion, rendered no certification and in no way invited the public to rely on their financial judgment there was no peculiar(a) relationship that imposed a duty of disclosure (Cashell, 1995).Accountant Responsibility to the Government Different local, state and federal governments h ave different rules and regulations that accountants need to learn for the area and industry that they will be work in. This is important to find out and comply with the different regulations. This is part of an accountants responsibility to win accounting services that are in compliance with the government regulations for your clients particular industry. There may be different regulations for different industries so it is important to know which regulations are pertinent to your client.CPA for Responsibility to Government Case Some state laws might grant accountant client privileges, but these laws do not usually extend to a summons or subpoena related to a Federal Investigation by such agencies such as the IRS, or the SEC. In a case, project v. United States, the Supreme approach concluded that no Federal accountant client privilege exists and state created privileges do not apply to Federal cases. Before an accountant is responding to a Federal agency, the accountant should be sure that they are only responding to a valid and enforceable subpoena.In another case, Roberts v. Chaple, the Appellate Court ruled that the accountant violated Georgias statutory accountant client privilege because he provided information to the IRS without having been served a valid summons or subpoena. Some state privilege laws could also affect the ability to release information pursuant to a review of a CPAs practice. Firms are responsible for meeting and keeping client confidentiality obligations whenever state statutes do not clearly provide a confidentiality exemption for a peer review of a firms practice.Whenever an accountant is not sure on if information should be released it would be best to look up a lawyer and obtain legal counsel to ensure that they are not breaking any laws or violating any confidentiality agreements or obligations(Cashell, 1995). Conclusion Accountants need to be ethical and practice with the highest professionalism and ethics. Accountants have many responsibilities not only to the client that they are servicing but to the government and to third parties. Responsibilities are higher to clients then third parties but it is important to know when and where your responsibility for each is.If an accountant is negligent or not responsible to the parties when they should have been there are consequences. An accountants main responsibility is to their client, it is important to keep client information confidential at all times. Not keeping client information confidential can have a negative effect and consequences on the accountant and the client. It is important that accountants do not disclose client information without the permission from the client first. All accountants need to have and maintain the highest ethics, professionalism and confidentiality.