Accountant Responsibility

What is 'Accountant Responsibility'

Accountant responsibility is the ethical responsibility an accountant has to those who rely on his work. An accountant has a responsibility to his clients, his company's managers, investors and creditors, as well as to outside regulatory bodies such as the Internal Revenue Service. Accountants are responsible for the validity of the financial statements they work on, and they must perform their duties in accordance with all applicable principles, standards and laws.

BREAKING DOWN 'Accountant Responsibility'

Accountant responsibility varies slightly based on the accountant's relationship with the tax filer or business in question. Independent accountants with a number of clients see confidential information, ranging from personal Social Security numbers to business sales data, and must observe accountant-client privilege. They cannot share private personal or business data with competitors or others.

Similarly, accountants who work for accounting firms also have a responsibility to keep information private, but they also have a responsibility to their firm. Namely, they must accurately track their hours and tasks completed. For example, if an accountant is doing an audit, he should only tick off items he has actually completed, rather than pretending he has done things he has not to speed up the process or bolster his logged hours.

If an accountant works directly for a business, as an in-house accountant, he has access to information many others in the company do not, ranging from payroll numbers to news about staff layoffs, and he also has to treat this information discretely. In addition to having a responsibility to the people who work at the company, in-house accountants are also responsible to stockholders and creditors. If an accountant does not uphold his responsibilities, it can have broad effects on the accounting industry and even the financial markets.

Accountant Responsibility and the Internal Revenue Service

Although accountants have a great deal of responsibility to their clients, if the Internal Revenue Service finds an error in an individual's tax return, it does not hold the tax preparer or accountant responsible. Rather, the IRS adjusts the return and holds the taxpayer responsible for the additional tax, fees and penalties. However, an individual who has been wronged by an accountant's misconduct can bring a claim of negligence against the accountant based on the fact the accountant breached his duty to the client and caused personal or financial damages.

The IRS also accepts complaints about tax return preparers who have committed fraud, and anyone with an issue may submit a complaint using Form 14157, Complaint: Tax Return Preparer. In-house accountants who cook the books or purposefully include erroneous data in their company's tax returns or accounting documents are responsible for misconduct and may even be criminally liable.