Third Party Actions Against Accountants.

Abstract A topic which has of late been receiving attention from accountants is that of their legal responsibility, not only to clients but to third parties, the client's creditors and stockholders in the U.S. The purpose of this article is to discuss some of the characteristics of reported third party actions against accountants. All these actions were brought at common law and were instituted by third parties seeking to recover in damage losses supposedly sustained as a result of a contended proper reliance upon the independent accountants' allegedly negligent or fraudulent misrepresentations. It is not the purpose of this article to discuss the development of the common law principles governing third party actions against accountants, but a brief statement of these principles may facilitate an understanding of a portion of the material, which follows that, in general, the major principles are accountants may not be held liable to third parties for negligence, and accountants may be held liable to third parties for fraud.