The nature of today's financial information is changing faster than the public user can respond. The public is beginning to rely more heavily on the auditors of this information, imposing upon the professional a level of social responsibility unparalleled by that of prior years. This increasing reliance on the accounting profession is the focus of this Article. This paper will raise and discuss two interrelated issues. First, to whom, if anyone, should an auditor be held liable for negligence in the performance of his professional duties? Second, accepting the current system of legal responsibilities, what is the profession doing to satisfy society's demands for more and better information? This Article will present and analyze these questions in terms of the accountant's common law negligence liability to third-party users of financial information. This Article will discuss the distinction between professional standards and legal standards. It will then focus on a discussion of the common law as it relates to the notion of holding a CPA liable to a third-party user of audited financial statements. It will conclude by discussing some policy implications of expanding the scope of the CPA's responsibility to third persons and suggest a few general guidelines for a more effective system of allocating the risks and responsibilities of financial information among the producers and users of the information.
James W. Zisa, Guarding the Guardians: Expanding Auditor Negligence Liability to Third-Party Users of Financial Information, 11 Campbell L. Rev. 123 (1989).