Certified Public Accounts Accountability An accountant is someone who prepares and analyzes financial records for a business, government, or individual. Decision makers interpret financial information to plan and then use these financial documents. A certified public accountant (CPA) is an accountant who takes and passes a uniform state test and then obtains a special license to practice. Accountants are professionals whose expertise and knowledge are relied upon by the clients who hire them. Because of this experience, the financial reports and statements that an accountant produces for their clients are considered a fair and accurate account of their clients' financial situation. Customers and third parties use these reports and financial statements to make important decisions. Because of the way these financial reports and statements are used, an accountant is accountable to his or her clients and sometimes to third parties. There is potential liability under: (1) Common law (2) Securities laws (3) Internal Revenue Code An accountant's liability to his clients under common law An accountant's common law liability in against his client may include: (1) Breach of contract (2) Negligence (3) FraudBreach of contract is the failure, without legal excuse, of an account to fulfill its obligations under the contract between the client and the accountant. The accountant has a duty towards the client to honor the terms of the stipulated contract. If a breach of contract occurs, the accountant may be held liable for expenses incurred by the client in finding and hiring another accountant, as well as any fines imposed on the client. the customer and any other foreseeable monetary loss. Negligence is the failure to exercise the standard of care that a reasonable person would exercise in similar circumstances. To prove negligence, four elements must be proven. The elements of negligence: (1) There was a duty of care (2) The duty of care was breached (3) The plaintiff (customer) suffered damage (4) The damage was approximated by the breach of the duty of care diligence on the part of the defendants (accountants). An accountant has the standard of care to comply with generally accepted accounting practices (GAAP) and generally accepted auditing standards (GAAS). Any violation of these standards is considered evidence of negligence on the part of the accountant, although compliance with these standards does not necessarily relieve him or her from potential legal liability. Fraud is any false statement, whether by misrepresentation or omission of material fact, knowingly made with intent to deceive another, and which a reasonable person would rely on and rely on to his or her detriment. There are four elements to fraud.