NEGLIGENCE LAW SUITS AND THE ACCOUNTANT
| Date | 01 February 1993 |
| DOI | https://doi.org/10.1108/eb024788 |
| Published date | 01 February 1993 |
| Pages | 403-407 |
| Author | ROGER TRAPP |
| Subject Matter | Accounting & finance |
NEGLIGENCE LAW SUITS AND THE ACCOUNTANT
Received: 3rd November, 1992
ROGER TRAPP
ROGER
TRAPP
WRITES ABOUT ACCOUNTANCY AND
MANAGEMENT ISSUES FOR THE INDEPENDENT
AND INDEPENDENT ON SUNDAY NEWSPAPERS
HE IS THE EDITOR OF MY BIGGEST MISTAKE', A
COLLECTION OF CONTRIBUTIONS TO THE
WEEKLY INDEPENDENT ON SUNDAY COLUMN
THAT WAS PUBLISHED IN NOVEMBER 1991.
ABSTRACT
The paper
argues
that
increasing litigation
and expanding
claims
on
both sides
of the
Atlantic are threatening the survival of
even the largest
accounting
practices.
In
the
UK,
firms are so
concerned
that they are
making
reform
of the liability
system
the
price of
accepting
wider
responsibility
for
their audit work
For years accountants when asked to
accept greater responsibility for
their company audits have pointed
to the USA in explanation of their
reluctance. There, they say, an
epidemic of law suits has brought a
crisis upon the medical profession.
Doctors are so fearful of being the
subjects of negligence claims
brought by patients or their relatives
that they are either deserting par-
ticularly risky areas of practice, such
as antenatal care, or are indulging in
defensive
—
and costly
—
treatments
in an effort to cover all eventualities.
Surely, they say, nobody would want
such a situation to apply in this
country, and to accountants.
The argument is not so fanciful as
it perhaps sounds. Certainly, doctors
have borne the brunt of the Ameri-
can public's dissatisfaction. But any
profession where a duty of care can
be held to exist has had its share of
negligence cases.
And since it is generally assumed
that what is happening in the USA
now will visit Britain in five years'
time,
just about everybody in the
professions has been casting nervous
glances westwards. This is particu-
larly true of the accounting firms,
which have already started to see
multi-million pound cases. In
October 1992, for instance, Ernst &
Young, one of the big six inter-
national firms, agreed to pay a signi-
ficant proportion of a £4.6m
settlement of a claim brought by
mini-conglomerate Walker Green-
403
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