B.A. (Bachelor of Arts)
Department of Accountancy
Currently, accounting firms have become the target of the investors and creditors of failing or bankrupt companies. Under the legal doctrine of joint and several liability, auditors are being brought to court not because they are at fault for poor investment decisions but because they are the only defendants with "deep pockets." The highly litigious atmosphere surrounding the public accounting profession is creating an adverse impact on public accounting firms and the U.S. economy. Tort reform is necessary if the accounting profession is going to continue to thrive. By conducting research with professional journals and interviewing professionals, I explored the possible remedies for the present litigation crisis. Replacing joint and several liability with proportionate liability is one of the more popular proposals. Other proposed reforms include enacting the privity standard, altering the audit function, and allowing for public accounting firms to incorporate. All proposals must be individually examined and the best ones made into laws because tort reform is no longer a matter of consideration for public accounting firms but a matter of survival.
Graham, James M., "Legal liability : an epidemic plaguing the accounting profession" (1993). Honors Capstones. 734.
Northern Illinois University
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