Accountant's Liability

DEFINITION of 'Accountant's Liability'

An accountant's legal liability while performing professional duties. An accountant is liable for a client's accounting misstatements. This risk of being responsible for fraud or misstatement forces accountants to be knowledgeable and employ all applicable accounting standards. An accountant who is negligible in his or her examination of a company can face legal charges from either the company or investors and creditors that rely on the accountant's work.

BREAKING DOWN 'Accountant's Liability'

Accountant's liability adds an element of pressure to an accountant's performance of duties. An accountant's actual participation in a fraud can be hard to prove because management could be committing the fraud, which the accountant failed to notice. This makes the accountant legally liable for being negligent of fraud or misstatements, even if he or she had no direct hand in committing them.

RELATED TERMS
  1. Accountability

    The responsibility of either an individual or department to perform ...
  2. Accountant

    A professional who performs accounting functions such as audits ...
  3. Chart Of Accounts

    A listing of each account a company owns, along with the account ...
  4. Accountant Responsibility

    The ethical responsibility that an accountant has to those who ...
  5. Material Weakness

    When one or more of a company's internal controls, put in place ...
  6. Account History

    All activity within an account, usually since inception. In a ...
Related Articles
  1. Executive Compensation

    Accountant: Job Description & Average Salary

    Discover what the job description of an accountant entails, along with education and training, salary and skills necessary for success.
  2. Investing Basics

    A Day In The Life Of An Accountant

    An analysis of the accountant profession, who becomes an accountant, what they do, where they work, and salary ranges.
  3. Investing Basics

    What Is A Trading Account?

    A trading account enables an investor to buy and sell securities.
  4. Professionals

    Accounting Research Manager: Job Description & Average Salary

    Learn about the average salary of an accounting research manager as well as the necessary skills, experience and education, and licenses to hold this position.
  5. Professionals

    Tax Accounting

    Tax Accounting
  6. Home & Auto

    Mortgage Fraud: Understanding And Avoiding It

    There are many different ways to be victimized through home ownership - learn how to identify and avoid these crimes.
  7. Executive Compensation

    Accounting Research Manager: Career Path & Qualifications

    Discover the basic responsibilities of an accounting research manager, the path this career usually takes and the qualifications needed for this career.
  8. Executive Compensation

    Accounting Research Manager: Career Path & Qualifications

    Discover the basic responsibilities of an accounting research manager, the path this career usually takes and the qualifications needed for this career.
  9. Forex

    Types of Accounts

    The different types of forex trading accounts you can choose from
  10. Savings

    Understanding Savings Accounts

    A deposit account held at a bank or other financial institution that provides principal security and a modest interest rate.
RELATED FAQS
  1. What does it mean when the shares in my account have been liquidated?

    An account liquidation occurs when the holdings of an account are sold off by the firm in which the account was created. ... Read Answer >>
  2. How is inherent risk assessed by an auditor?

    Learn how CPA auditors assess the levels of inherent risk of different audit areas that they use to design the procedures ... Read Answer >>
  3. What is accounting fraud?

    Learn what accounting fraud is, why a company commits account fraud and some types of accounting fraud that misrepresent ... Read Answer >>
  4. What are the main objectives of cost accounting?

    Learn about the main benefits of cost accounting systems, why they are different from financial accounting and why they are ... Read Answer >>
  5. What's the difference between the current account and the capital account?

    Learn the difference between the current account and capital account in the balance of payments. Compare and contrast their ... Read Answer >>
  6. What are the main advantages and disadvantages to the cost accounting method?

    Read a brief overview of the main advantages and disadvantages of the cost accounting method as it relates to business analysis ... Read Answer >>
Hot Definitions
  1. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  2. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  3. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  4. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  5. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  6. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
Trading Center