Publication Date

1-1-1995

Document Type

Dissertation/Thesis

First Advisor

Reding, Kurt

Degree Name

B.S. (Bachelor of Science)

Department

Department of Accountancy

Abstract

This paper will begin with a brief overview of the research methodology used to gather the information contained throughout this honors project. This paper will then explain the background of the public accounting profession and will provide a brief overview of the auditor's contractual as well as tort liability for negligence. Next, the paper will discuss two dramatically opposing legal doctrines--strict contractual privity and reasonably foreseeable third party--and the viewpoints of the two opposing parties--the financial statement auditors and the third party financial statement users. Then, other "middle-of-the-road" legal doctrines will be examined. The paper will conclude with the author's opinion of the liability crisis and suggest potential ways to rectify the legal liability crisis--thus closing the expectation gap. This Honors Capstone was written to critically assess recent case-law and judicial decisions surrounding the financial statement auditor's legal liability for negligence. At the conclusion of this assessment, I will formulate a conclusion about which viewpoints and which judicial rulings will lead to my ideal compromise--allow for a prosperous accounting profession while still allowing injured investors to recover damages for actual audit failures.

Extent

29 pages

Language

eng

Publisher

Northern Illinois University

Rights Statement

In Copyright

Rights Statement 2

NIU theses are protected by copyright. They may be viewed from Huskie Commons for any purpose, but reproduction or distribution in any format is prohibited without the written permission of the authors.

Media Type

Text

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