Accounting Regulations Essay

control Responsibilities By Jennifer Koppelman March 11, 2014 restrainer Responsibility restrainers pack responsibilities to m completely various groups such as their nodes, the government and three set outies. It is principal(prenominal) that comptrollers act in a particular manner and pee steep honorable standards, integrity and passe-partoutism. Accountants job debt instrument is to validate fiscal evokements and perform the duties in accordance with alone the principles, standards and laws.Even though an restrainer is engage by a comp any(prenominal), they have a function to more more mountain than just the company. somewhat of the people that comptrollers ar accountable to, would be the companys management, investors, creditors, outside regulatory bodies, and the integrity of the monetary markets. Accountants carry to be consistent and constantly be c befully exercising ascribable diligence and pay close context of the materiality of content (Ac countant Responsibility). Accountants have a code of original get that they should hold to.This submits that accountants should main(prenominal)tain objectivity and be protestal of conflicts of interest in the discharging professional responsibilities. An accountant in habitual practice should be independent in fact and show when providing size up and other attestation function. Situations where accountants volition withdraw to show objectivity would be when they be felt compelled to deliver bad news to a guest or employer based on an analysis that they had performed (Colson, 2004). thither argon two different types of visitors inbred scrutiniseors and external auditors which have different responsibilities. internal auditors have the main responsibility to direct statements that present the pecuniary particular of a company in a true(p) way, meaning that as much disclosure as necessary to give a reasonable picture of the pecuniary situation to any user havi ng a assign to the noesis. External auditors responsibility is to affirm that this has happened by issuing an touch sensation as to whether the pecuniary statement clean presents the financial position of that corporation (Duska, 2005). Accountant Responsibility to Clients Accountants have a professional responsibility to knobs to go by their culture confidential.The discover states that a element in the public practice shall non break any confidential thickening nurture without the particular consent of the leaf node. This withal extends to other accountants non directly involved with the client who mystify instruction by means of practice check outs or sanctioned disciplinary hearings to guard confidentially. thither are certain exceptions that facilitate shape with other professional and well-grounded tariffs. Maintaining confidentiality is non wholly a professional obligation but also a intelligent obligation.General knowledge and expertise obtained through a client engagement is non considered to be confidential discip extraction (Cashell). Accountants have ethical responsibility to protect their clients, start out financial statements and tax returns that are to the vanquish of their ability after performing proper due diligence. If on that point was an event that an audit would occur for a government bureau 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 flush toilet Institution of certified public accountants has an despatchicial rule, Rule 301 states a member in the public practice shall not key any confidential knowledge without the specific consent of the client. Accountants number one responsibility is to its clients, it is all important(p) that accountants do not wear client k nowledge to anyone without the clients permit first. There are consequences to the accountant if they do not keep client information confidential.It can also have a negative effect on the clients line of merchandise, which allow negatively reckon the accountant also (ET Section 301 Client Confidential Information). certified public accountant Responsibility to Clients Case Even when an accountant has the intention to warn others of pending financial harm the courts have held that accountants must not give any client information, client information should always remain confidential. In a incase Wagenheim v. black lovage consort & Co the court ruled that horse parsley earmark improperly divulged confidential information about their client, Consolidata selective information work, to other clients.Consolidata info serve, an audit client of black lovage founder performed payroll services for several of Alexander concessions other clients. Alexander Grant discovered that Co nsolidata info 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 patronise financial damage without example them. The reasoned opinion was against Alexander Grant, the court said that there was no inference that Consolidata Data Services was in a financial rigourousness that they could not recover from.Which Alexander Grant had no legal right to inform threesome 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 whole picture of a business and a company can state that they could have recovered from the financial burden but because the accountant whitethorn have told other clients that could ruin the composition of the client and affect the business. It is always safer not to say any thing in regards to the financial situations when you have an obligation to your client.Accountant Responsibility to tierce Parties Accountants do not have as much liability to tercet parties as they do to clients. Accountants have a liability to ternary parties who are blasphemeing 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 whitethorn rely and act upon the auditors opinion, the auditor is obtainually bond only to the client and usually owes nothing, no legal work to third parties for negligence (Greene, 2003). Accountants need to be very upkeepful when warning outsiders of a clients fraud. ground on prior court cases, certifie d public accountants generally do not have an obligation to inform outsiders of cognise fraud unless if they remain silent they are becoming culpable themselves. It is a insecure situation if an accountant decides to blow the blab (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 indebtedness of care towards third parties in certain circumstances, condescension that there is no contractual duties. parcel that give rise to such duty have been considered in a true number of cases in recent old age and three general tests have been developed. unitary of the tests would be if there is foreseeability damage, proximity amid parties and considerations of justice and reasonableness. other test would be testing the assumptions of reasonability. If the court would take an incremental approach in comparing the human relationship in any disposed(p) 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 they were relying on the audit, only for fraudulent conduct and proof of mere negligence is not sufficient. If the accountant knew that the audit report for the client was mean 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 cave in a motioning involving the client and the third party (Professional obligation of Accountants & Auditors). Duty to Disclose to Third Parties In some cases information should be let out to third parties but an accountant ask 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 thus an accountant has a duty to disclose information.Once the letter is sign ed off on by an officer past the letter serves as a contract (Engagement Letter). In one case ready reckoner storage of bullion Ltd. v. Arthur Andersen & Co. the certified public accountant had a duty to disclose. Arthur Andersen was the auditor for two clients, caudex of investment trusts and King Resources corporation. King Resources Corp developed natural resource properties and agreed to be the sole vendor of such properties to Fund of Funds at prices no higher(prenominal) than those charged to King Resource Corp industrial clients.Arthur Andersen learned the agreement was not being met but failed to inform Fund of Funds. The court did rule that Arthur Andersen should have discover 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 certif ied public accountant was found that he did not have a duty to disclose information.The case Gold v DCL Inc. , damage Waterhouse & Co. informed DCL in December that they think to qualify their audit report on DCLs financial statements. DCL was in the business of leasing computers and price Waterhouse believed that their ability to recover their computer equipment costs was impaired due to the threatening release of a new line of more powerful computers by IBM. In February, DCL announced 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 giving or has given some representation or security and the silence and inaction of the defendants auditors did not make them culpable. The courts reasoning that the CPA did not have to disclose was because the auditors had issued no public opinion, rend ered no certification and in no way invited the public to rely on their financial judgment there was no special relationship that impose a duty of disclosure (Cashell, 1995).Accountant Responsibility to the Government Different local, state and federal governments have different rules and regulations that accountants need to learn for the area and industry that they allow for be working in. This is important to knock out and comply with the different regulations. This is part of an accountants responsibility to provide 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 or so state laws might grant accountant client privileges, but these laws do not usually extend to a cite or subpoena related to a federal official Investigation by such agencies such as the IRS, or the SEC. In a case, Couch v. United States, the autocratic woo concluded that no national accountant client privilege exists and state created privileges do not apply to federal official 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 tabuns 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(predicate) to a review of a CPAs practice. Firms are responsible for confrontation 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 natter 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.