| Description |
For several decades, the most common service offered by the large public accounting firms has been auditing. This area of accounting is experiencing a litigation explosion very similar to that of the medical and legal professions. But the potential financial loss to accountants may be more serious and burdensome than the medical and legal professions due to recent judicial decisions regarding accountants' negligence liability to third parties. This increase in liability is at least partly due to the changing expectations being placed upon today's auditors. Years ago auditors were expected to be a watch-dog for owner-managers, ensuring that company policies were being carried out efficiently and effectively, and ensuring that the financial statements were represented accurately and fairly. While today's audit opinion is addressed to management, its primary purpose or function is to influence the actions of noncontractual third parties, such as investors and creditors. Because the principal users of the audit opinion are changing, it has become necessary to re-evaluate the auditor's obligation to those users. |
