Exposure to Professional Liability
by HARRY R. WEYRICH Partner, Executive Office
Presented before the Georgia Society of Certified Public Accountants, Atlanta Chapter—December 1969
THE EXTENT to which certified public accountants are exposed today to the consequences of professional legal liability should be a matter of personal concern to every practitioner. It is a form of liability that is alive and ever present, and it is assuming a proportion that finds its roots in the past, but is only now taking full shape. For these reasons, there is greater need than ever before for accountants to know where they stand —or are likely to stand in the near future.
In order to focus the problem on day-to-day activities, it seems appropriate at the outset to distinguish between the accountant's professional
responsibilities and his legal responsibilities.
Kohler's A Dictionary for Accountants defines "accountant's responsibility"
as: "The moral obligation assumed by a public accountant, as a member of a profession, in certifying to a financial statement from which information may be sought by management, creditors, and investors." Although it is well known that an accountant renders many services other than that of certifying financial statements, Kohler's definition should serve for purposes of this analysis.
The American Institute of Certified Public Accountants and many states have established minimum standards for the accountant in his professional
practice. Usually, the penalties for violating such standards are limited to the possible temporary or permanent revocation of the accountant's
license to practice in his state or to loss of membership in the national organization. In addition, of course, he faces the loss of his practice and other personal embarrassments.
Legal liability, on the other hand, as distinguished from moral responsibility,
is enforceable under statutory and common law, and exposes the accountant not only to the penalties described above but to possible substantial monetary loss to those alleging that they were damaged as a result of his actions. He is confronted also with the possibility of revocation
of his right to represent others before state and federal governmental agencies, such as the Securities and Exchange Commission. Among the