Accountants' Legal Responsibilities and Liability Insurance
BY JOHN W. QUEENAN PARTNER, EXECUTIVE OFFICE
Presented at the Accounting Study Conference, Colby College, Waterville, Maine — September, 1955
The title of this talk as described in the program is "Accountants' Liability Insurance". With your permission, however, I plan to expand the subject to include accountants' legal responsibilities as well, since the effectiveness and very existence of liability insurance must be based upon a broad understanding within the profession of its legal respon-sibilities".
No single characteristic distinguishes a profession from other vocations. The absence of the employer-employee relationship between the professional man (or firm) and his client, an attribute of every profession, is not unique to the professions. Highly developed skills, intellectual or physical, are not sufficient to identify the professional man. These characteristics, as well as high standards of educational training, are attributes of numerous lines of endeavor, some of which are not ordinarily described as professions.
There are, however, two characteristics which are common to all professions. The first of these is the existence of a self-enforceable code of professional conduct and acceptance of it by a substantial majority
of the members of a profession. The ability of a profession to protect the general public against unqualified and insincere persons who attempt to exploit the standing and reputation of the profession is a distinguishing
The second prerequisite of professional status relates to the very nature of the services performed. Professional service either facilitates
the making of a decision by the client which affects his well-being, or it is intended to protect him against threats to, or invasions of, his personal well-being or his civil rights. The bases of such services, therefore, are (1) the rendering of an expert judgment, and (2) an action or a decision made in reliance on that judgment.
In the rendering of an expert judgment, the professional man assumes responsibilities commensurate with his expertness and with the economic significance of his judgment. He takes calculated risks in