An accountant plays an increasingly important role when it audits and reports different financial aspects about a company, which includes but not limits to a company’s balance sheet, cash flows, and incomes. The final accounting statements, which will be sent to the clients and sometimes to other stakeholders, will give not only clients but also outsiders a general overview of a company’s financial situation. Investors and cooperators who observe a company merely through its financial reports are insufficient, incomplete and unilateral. However, they still rely on this way because there is no other more efficient method. In this way, accountants are easily to blame for providing misleading, false, and inaccurate financial reports when their
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(1986), justice Lopes LJ said that auditors were “watchdogs not bloodhounds.” In the accounting industry, there are many kinds of accounting performers for clients, but the auditing service is the easiest one to raise liability problem to third party. Auditor expresses its independent, systematic and objective opinions about client’s financial statements according to corresponded accounting principles. According to Statement of Auditing 100, these opinions are not guarantee, which means that auditors through the best knowledge and experiences to make judgments about the financial statements. It is reasonable to have negligence mistakes. Under the Tort Law, profession has liability when it provides “false information” to others. In the Blue Bell case, Blue Bell blamed PPM for offering the combined statements instead of consolidated financial statements, which did not “’present fairly’ an accurate picture of financial situation of Myers (Texas) and Myers (Fort Worth).” All the evidences showed by Bernard Augen, the Blue Bell’s expert, focused on the situation of parent company, Myers (Delaware), which had potential influence to Myers (Texas). Nevertheless, if PPM gave consolidated financial statements to the Blue Bell, the Blue Bell would not see details about Myers (Texas), which was actual company traded with the Blue Bell, since the advantage of combined financial statements is that analyzed more detailed information towards the individual subsidiary companies. If there were serious problems in Myers (Texas), the Blue Bell would not notice it until Myers (Texas) claimed bankruptcy. At that time, the Blue Bell could claim again against the PPM because of offering consolidated financial statement. Actually, there is no answer about whether it is false to use combined financial statements. Non-clients will always miss some information if auditors had some optional method to audit and report financial information. It is a bad
(1986), justice Lopes LJ said that auditors were “watchdogs not bloodhounds.” In the accounting industry, there are many kinds of accounting performers for clients, but the auditing service is the easiest one to raise liability problem to third party. Auditor expresses its independent, systematic and objective opinions about client’s financial statements according to corresponded accounting principles. According to Statement of Auditing 100, these opinions are not guarantee, which means that auditors through the best knowledge and experiences to make judgments about the financial statements. It is reasonable to have negligence mistakes. Under the Tort Law, profession has liability when it provides “false information” to others. In the Blue Bell case, Blue Bell blamed PPM for offering the combined statements instead of consolidated financial statements, which did not “’present fairly’ an accurate picture of financial situation of Myers (Texas) and Myers (Fort Worth).” All the evidences showed by Bernard Augen, the Blue Bell’s expert, focused on the situation of parent company, Myers (Delaware), which had potential influence to Myers (Texas). Nevertheless, if PPM gave consolidated financial statements to the Blue Bell, the Blue Bell would not see details about Myers (Texas), which was actual company traded with the Blue Bell, since the advantage of combined financial statements is that analyzed more detailed information towards the individual subsidiary companies. If there were serious problems in Myers (Texas), the Blue Bell would not notice it until Myers (Texas) claimed bankruptcy. At that time, the Blue Bell could claim again against the PPM because of offering consolidated financial statement. Actually, there is no answer about whether it is false to use combined financial statements. Non-clients will always miss some information if auditors had some optional method to audit and report financial information. It is a bad