What Standard of Care Are Accountants Held to Under the Law?

Public accountants are often held to the same standard of care as doctors, lawyers, engineers and architects. This standard of care usually requires reasonable care and competence. This duty may extend beyond the client depending on the circumstances. Accountants professional liability insurance often accounts for a different level of protection specific to your field.

When it comes to general negligence, the law typically allows that liability be confined to the client. This means you usually cannot be held responsible for any damages experienced by other individuals who are not your client.

If you are accused of negligent misrepresentation, you may find that your duty of care is extended to beneficiaries who are likely to receive or be affected by the misinformation. These are often specifically intended beneficiaries who may rely on the information you report.

For intentional misrepresentation, you may owe a duty to anyone whom you could reasonably have foreseen would rely on the misrepresentation. If you make a representation with the intent to defraud an individual or business, it should not come as a surprise that you would be held to a higher standard of liability.

Many clients trust their accountants with their livelihoods. This should be seen as a grave responsibility that you do not take lightly. Because liability may be higher financial advisors and CPAs, you may want to consider getting accountants professional liability insurance. It can help protect you against lawsuits.