Accounting Regulations Essay

controller Responsibilities By Jennifer Koppelman March 11, 2014 Accountant Responsibility Accountants dedicate responsibilities to m whatsoever disparate groups much(prenominal) as their thickenings, the presidential term and third parties. It is all in-chief(postnominal)(predicate) that restrainers take on in a specific manner and stick out high ethical standards, honor and captainism. Accountants job responsibleness is to legalate financial statements and consummate the duties in accordance with all the principles, standards and laws.Even though an controller is chartered by a comp all, they have a responsibility to more to a greater extent people than just the company. Some of the people that accountants be responsible to, would be the companys management, investors, creditors, outside regulatory bodies, and the integrity of the financial markets. Accountants shoot to be consistent and constantly be attendingfully exercising collect diligence and pay close consideration of the materiality of content (Accountant Responsibility). Accountants have a code of professional person conduct that they should adhere to.This states that accountants should primary(prenominal)tain objectiveness and be free of conflicts of interest in the discharging professional responsibilities. An accountant in national practice should be independent in fact and port when providing audit and an a nonher(prenominal)(prenominal) attestation run. Situations where accountants go out claim to show objectiveness would be when they are felt compelled to deliver bad new(a)s to a thickening or employer based on an analysis that they had effected (Colson, 2004). There are two antithetic types of auditors internal auditors and external auditors which have different responsibilities. familiar auditors have the main responsibility to develop statements that present the financial role of a company in a fair way, meaning that as much disclosure as necessary to g ive a presumable picture of the financial situation to any user having a birdcall to the friendship. External auditors responsibility is to affirm that this has happened by publication an thinking as to whether the financial statement fairly presents the financial spirit of that corporation (Duska, 2005). Accountant Responsibility to Clients Accountants have a professional responsibility to guests to keep their doledge confidential.The rule states that a member in the public practice shall non disclose any confidential customer breeding without the specific consent of the lymph node. This similarly extends to other accountants non directly relate with the client who obtain reading through practice reviews or piece of tailonical disciplinary hearings to maintain confidentially. There are certain exceptions that facilitate conformance with other professional and legal pledges. Maintaining confidentiality is not only a professional obligation alone also a legal ob ligation.General knowledge and expertise obtained through a client engagement is not considered to be confidential information (Cashell). Accountants have ethical responsibility to protect their clients, make water financial statements and tax returns that are to the trump of their ability after acting proper due diligence. If in that location was an event that an audit would occur for a government agency they should represent their clients with professionalism. Accountants should always maintain the highest ethical standards. Accountants perform essential and critical roles in society.Accountants have responsibilities to all of those who use their professional work. The Ameri target Institution of certified public accountants has an official rule, Rule 301 states a member in the public practice shall not disclose any confidential information without the specific consent of the client. Accountants fig one responsibility is to its clients, it is outstanding that accountants do not disclose client information to anyone without the clients permission first. There are consequences to the accountant if they do not keep client information confidential.It can also have a negative effect on the clients business, which will negatively bear on the accountant also (ET Section 301 Client Confidential Information). CPA Responsibility to Clients quality Even when an accountant has the intention to warn others of unfinished financial harm the addresss have held that accountants must not give any client information, client information should always remain confidential. In a case Wagenheim v. horse parsley portion & Co the motor hotel ruled that Alexander pay improperly divulged confidential information about their client, Consolidata Data Services, to other clients.Consolidata Data Services, an audit client of Alexander assigning performed payroll function for several of Alexander Grants other clients. Alexander Grant discovered that Consolidata Data Services was having financial difficulty Alexander Grant warned their other clients to stop doing business with Consolidata Data Services. Alexander Grant argued that the other clients would suffer financial damage without warning them. The ruling was against Alexander Grant, the court said that there was no proof that Consolidata Data Services was in a financial hardship that they could not recover from.Which Alexander Grant had no legal right to inform third parties of the financial lodge that Consolidata Data Services was in (Cashell, 1995). It is important that accountants keep client information confidential at all times. The accountant might not know the whole picture of a business and a company can state that they could have recovered from the financial burden precisely because the accountant may have told other clients that could ruin the reputation of the client and concern the business. It is always safer not to say anything in regards to the financial situations when you have an obligation to your client.Accountant Responsibility to third Parties Accountants do not have as much liability to third parties as they do to clients. Accountants have a liability to third parties who are relying on the audit information, only if there is histrionulent conduct or proof of negligence would they be liable to the third companionship. When public accountants are done with an audit of their clients records and financials they put an opinion letter which sets forth, among other things, the scope of the audit and a professional opinion concerning the financial representations.Even though third parties may rely and act upon the auditors opinion, the auditor is contractually bond only to the client and usually owes nothing, no legal job to third parties for negligence (Greene, 2003). Accountants need to be very careful when warning outsiders of a clients fraud. Based on prior court cases, CPAs loosely do not have an obligation to inform outsiders of known fraud unless if they remain silent they are becoming culpable themselves. It is a raging situation if an accountant decides to blow the whistle (Cashell, 1995).Accountants are worldwidely not responsible to third parties in contracts because there is no privity of contract. However, accountants can be held to be a common law affair of care towards third parties in certain circumstances, despite that there is no contractual duties. hatful that give rise to such vocation have been considered in a substantial number of cases in recent years and three general tests have been developed. One of the tests would be if there is foreseeability damage, proximity between parties and considerations of nicety and reasonableness.Another test would be testing the assumptions of reasonability. If the court would take an incremental approach in comparing the relationship in any habituated case to previously decided cases in which a calling of care had been recognized or rejected. An accountant can be lia ble to a third party if the accountant knew or should have known that they were relying on the audit, only for fraudulent conduct and proof of mere negligence is not sufficient. If the accountant knew that the audit report for the client was intended to supply the information to a third party who would rely on the information.If the third party would be relying on the information in a decision concerning proceeding involving the client and the third party (Professional Liability of Accountants & Auditors). Duty to Disclose to Third Parties In some cases information should be disclosed to third parties but an accountant needs to be very careful and proceed accordingly. If it is slender in their engagement letter, which is a written arrangement to perform services in exchange for compensation then an accountant has a duty to disclose information.Once the letter is signed off on by an officer then the letter serves as a contract (Engagement Letter). In one case Fund of Funds Ltd. v. Arthur Andersen & Co. the CPA had a duty to disclose. Arthur Andersen was the auditor for two clients, Fund of Funds and King Resources pot. King Resources Corp developed natural resource properties and agreed to be the sole seller of such properties to Fund of Funds at prices no higher than those aerated to King Resource Corp industrial clients.Arthur Andersen learned the agreement was not being met but failed to inform Fund of Funds. The court did rule that Arthur Andersen should have disclosed this fact to Fund of Funds because they had knowledge of the overcharges, knew the terms of the agreement that was being violated and the language of their engagement letter produced a contractual obligation to reveal that information. Another case involving duty to disclose, this one a CPA was found that he did not have a duty to disclose information.The case Gold v DCL Inc. , Price Waterhouse & Co. informed DCL in December that they intended to qualify their audit report on DCLs financia l statements. DCL was in the business of leasing calculating machines and Price Waterhouse believed that their ability to recover their computer equipment costs was impaired due to the impending release of a new line of more powerful computers by IBM. In February, DCL announced clams without mentioning Price Waterhouses concern and on February 15 Price Waterhouse was replaced.The court ruled that there was no basis in principle or authority for extending an auditors duty to disclose beyond cases where the auditor is giving or has given some representation or certification and the silence and inactivity of the defendants auditors did not make them culpable. The courts reasoning that the CPA did not have to disclose was because the auditors had issued no public opinion, rendered no certification and in no way invited the public to rely on their financial taste there was no special relationship that imposed a duty of disclosure (Cashell, 1995).Accountant Responsibility to the Govern ment Different local, state and federal official governments have different rules and regulations that accountants need to learn for the area and industry that they will be working in. This is important to find out and comply with the different regulations. This is part of an accountants responsibility to provide accounting services that are in compliance with the government regulations for your clients particular industry. There may be different regulations for different industries so it is important to know which regulations are pertinent to your client.CPA for Responsibility to Government Case Some state laws might grant accountant client privileges, but these laws do not usually extend to a summons or subpoena related to a Federal Investigation by such agencies such as the IRS, or the SEC. In a case, Couch v. join States, the Supreme Court concluded that no Federal accountant client privilege exists and state created privileges do not apply to Federal cases. before an accounta nt is responding to a Federal agency, the accountant should be sure that they are only responding to a valid and enforceable subpoena.In another case, Roberts v. Chaple, the appellant Court ruled that the accountant violated Georgias statutory accountant client privilege because he provided information to the IRS without having been served a valid summons or subpoena. Some state privilege laws could also affect the ability to release information pursuant to a review of a CPAs practice. Firms are responsible for meeting and keeping client confidentiality obligations whenever state statutes do not clearly provide a confidentiality freedom for a peer review of a firms practice.Whenever an accountant is not sure on if information should be released it would be best to consult a lawyer and obtain legal counsel to ascertain that they are not breaking any laws or violating any confidentiality agreements or obligations(Cashell, 1995). Conclusion Accountants need to be ethical and practice with the highest professionalism and ethics. Accountants have many responsibilities not only to the client that they are servicing but to the government and to third parties. Responsibilities are higher to clients then third parties but it is important to know when and where your responsibility for each is.If an accountant is negligent or not responsible to the parties when they should have been there are consequences. An accountants main responsibility is to their client, it is important to keep client information confidential at all times. Not keeping client information confidential can have a negative effect and consequences on the accountant and the client. It is important that accountants do not disclose client information without the permission from the client first. All accountants need to have and maintain the highest ethics, professionalism and confidentiality.