Some Aspects Of Accountants' Legal Responsibility
BY OSCAR S. GELLEIN Partner, Newark Office
Presented at the Graduate Study Conference of The California Society of Certified Public Accountants, Claremont—August 1958
RESPONSIBILITY is the quality that sets the professional endeavor apart from man's other activities. Risk attends responsibility. Unbounded responsibility implies unbearable risk. The absence of risk, on the other hand, probably means diluted responsibility. Our professional goal is to balance risk and responsibility.
TYPES OF RESPONSIBILITY
The professional responsibility of the accountant has many sides. There is the duty he owes society and the community in which he lives. It concerns public service of many kinds and an active part in the public forum, particularly when his competence fits him well to discuss the issues. Failure of the individual accountant to accept this duty may block his professional progress, and failure of many to accept it may deter the advance of the profession. The penalty for its neglect is stunted growth.
There is the duty that the accountant owes his profession and his contemporaries. This one concerns such matters as ethics, conduct,
and furtherance of the profession's affairs. Laxity in the discharge of duties concerning ethics and competence may take away from what the profession is and from what the accountant has. It may set the profession back by putting it in a bad light. It may bring damage to the accountant through disciplinary action in the form of a reprimand or even the denial of the right to practice. The action may come from a professional society or organization; or it may come from a government agency, such as a state board of accountancy or the Securities and Exchange Commission.
The responsibility of the accountant to those served by him and to those entitled to rely upon his work, particularly in connection with his reports, will have my principal attention. Neglect of this responsibility may be unbearably costly. Liability insurance can be obtained to cover monetary claims successfully asserted against the accountant and, perhaps more importantly, to cover the out-of-pocket cost of an effective defense. But, important as it is, it cannot furnish immunity from all of the losses, both tangible and intangible, attending
the defense of a claim. Loss of time may be considerable. In