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Certified Public Accountant liability and its prevention

Author: XuHongFan From: www.yourpaper.net Posted: 2010-06-16 18:58:05 Read:
With economic development and capital markets continues to grow, the quality of financial letter from, directly related to the economic interests of the parties has gradually become the focus of public attention, plus on national legislation began to increase the quality of the information appraisers - Certified Public Accountants this liability, investors, creditors prosecution of Certified Public Accountants case letter from financial losses and a sharp increase: as well as some scholars have said the CPA profession in China ushered in the "litigation crisis" (Ruo Shan Ho Hung 1999) unrestrained litigation not only consume the energy and financial resources of the CPA, the accounting firm gradually exit from high-risk, high social value of assurance services so obviously not conducive to the development of the CPA profession, therefore, to explore the CPA legal responsibility, research has a very important practical significance for the protection of the legitimate rights and interests of Certified Public Accountants. promote the development of the cause of China's Certified Public Accountants, the establishment of normal social and economic order:
First, the law office of Certified Public Accountants genetic
Any one job, the responsibilities of their social status has a direct connection between: only when ready to assume responsibility for the legal consequences caused by the failure to meet the requirements of Certified Public Accountants, the status and professional competence With the increasing of the CPA audit occupational status will be recognized, their legal responsibility is increasing: The reason is mainly the following aspects:
Public expectations and audit capabilities gap
Certified Public Accountant risk exposure to a certain extent from the public always thought that the vocational high expectations of the public, CPA audited the financial statements should ensure that the financial statements foolproof, and should not exist any misleading information but the fact two , accounting language limitations of economic business, the diversity of the modern means of forgery and auditing technical limitations, making the functions of Certified Public Accountants identifying information subject to considerable restrictions, and can not guarantee that the audited financial statements can not find any Once the error; This is the gap in the capability of social expectations and certified public accountant expectations dashed report user is bound to frustrate the expectations of the losses caused by, transferred to a certified public accountant who demand it to bear liability
Enhanced public awareness of the law and legal responsibility is not clear
With the development of society, the public awareness of the law gradually strengthen, there is a growing emphasis on the use of legal means to resolve conflicts of interest and disputes: When the public loss due to the use of false accounting information is bound by legal means to seek economic compensation: In judicial practice , when a false accounting information related to multiple aspects, the judiciary can only use the "irrational unlimited liability" doctrine of precedent, that is, who has the ability to accept financial compensation, and who should bear the responsibility: that is, the so-called "deep pocket theory" accounting firm because of the ability to provide compensation in the case hearing often lost, but also contributed to the aggravation of Certified Public Accountants liability.
3, the economic environment pay more, the audit risk greatly improved
In a market economy, the economic environment is increasingly complex, the types of transactions between the various economic organizations, trading tools are in a constant state of change: such as bankruptcy, mergers and acquisitions, related party transactions or events from happening, derivative financial the development of the tool, making the business risk is increasing, but also makes the CPA audit increasingly complex task: Second, the advent of the computer, information carrier of the accounting books to the computer, not only changed the form of accounting reflect, more importantly, is to change the original audit staff are familiar with the collection of relations, greater manipulation of space: in this rapidly changing economic environment, the accounting principles or auditing standards may be delayed, resulting in audit raising the risk of corporate fraud, and thus potentially increased the liability of the CPA:
Second, China's existing laws, the laws and regulations of certified public accountants any provisions
Our current laws and regulations involved in the subject matter of who bears the responsibility and bear the responsibility of certified public accountants liability, as well as applicable attribution rules and other issues have clear provisions:
"CPA Law" Article 24 provides: "accounting firm, in violation of the provisions of this Law, damage caused shall be liable for damages to the principal and other interested parties:" In addition, section 39 of the Act provides that: "Certified Public Accountant violation of these provisions, subject to warning, suspension of medical practice, and revocation of certificates and other administrative penalties; deliberately provide false auditing report, capital verification report constitutes a crime, shall be investigated for criminal responsibility according to law: "the provisions of this Ordinance, a certified public accountant illegal practice or due to the fault of the commissioned holder or other interested losses, should bear civil liability, administrative liability or criminal liabilities.
Article 129 of the Companies Act provides that: "of asset assessment, verification or authentication mechanism to provide false documents confiscation of illegal gains and impose a fine of not more than five times, and can be ordered by the competent authorities in accordance with the law to the closure of the institution, suspension of direct responsibility the qualifications of the people: to constitute a crime, shall be investigated for criminal liability: "false report" the extension of the provisions in the Ordinance include verification report, the audit report, prospectus, listed companies report by certified public accountants by listed companies any report submitted to the Commission or the shareholders:
Article 229 of the Penal Code states: "bear Asset Appraisal dry, verification, validation, accounting, auditing, legal services and other duties intermediary organizations who willfully provide false documents, the circumstances are serious, shall be sentenced to to S years imprisonment and detention, single office or fined,,,,,, (see above) staff deliberately providing false documents. documents issued materially inaccurate, causing serious consequences sentenced to three years imprisonment and detention, solitary or fined from the Ordinance, CPA stakeholders liability related to CPA entire scope of business, such as asset valuation, verification, validation, auditing, should bear the liability is not limited to the administrative responsibility and civil liability, may also incur criminal liability:
View from above about the terms of the legal liability of Certified Public Accountants, certified public accountants should bear the legal responsibility of a wide range of deep degree of punishment: "What is the false information, as well as existing laws, regulations "negligence" and "willful" make specific defined criteria, but also to the judicial decision brought great uncertainty: the presence of professional understanding of the differences together with the accounting profession and the judiciary, resulting in the CPA often fall unreasonable disputes. , CPA to avoid legal proceedings countermeasures
The face of such fierce litigation environment, the accounting firm of certified public accountants should actively respond to and seek to improve their own practice standards and risk awareness on the basis of the coordination of the parties to create a relaxed practice environment specific may take the following measures:
Strict compliance with the independent auditing standards and professional ethics shake Standards
Certified Public Accountants strict compliance with the requirements of the various professional standards and ethical principles, practice careful and prudent, and generally does not occur fault does not occur at least gross negligence. Secondly, a certified public accountant bear civil liability provided that whether the fault, determine the standard of the fault is whether to follow the requirements of the Independent Auditing Standards, should practicing cautious and serious attitude: in strict accordance with the independent auditing standards and code of ethics requirements, design and perform audit procedures that are appropriate caution all the problems found in the audit work should become each certified public accountant practicing habits:
Enhanced awareness of risk prevention
Increased risks due to the complexity of the economic environment, the CPA audit liable: Certified Public Accountant following aspects should enhance risk awareness: (1) to undertake business caution; accounting firm to undertake business should take the initiative to communicate with customers to understand, the trades to customers, customers' financial condition; moral character of the key management personnel of the customer, the customer to hire the purpose of the causes and clients of the accounting firm commissioned business concern; deterioration of the financial situation of enterprises, the moral quality of management and to hire the accounting firm clients in particular should be alert to: (2) high-risk business of caution. With the rapid development of information technology, a large number of emerging industries arises, such as'' network company, specializing in derivatives trading and investment company of these companies with the traditional industrial companies, financial fundamentally characterized by high risk and high return, with considerable uncertainty: Thus, the high risk of Certified Public Accountants audit of these companies according to their own ability to take risks, the choice to accept or reject these high-risk business consignment: (3) fully insured the liability insurance: Insured adequate liability insurance is a very important protection of Certified Public Accountants: Although the insurance does not absolve may be subject to legal proceedings, but it can prevent or reduce the failure of the action, the accounting firm financial loss:
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