What Is the Rationale Behind the Restatement Test of Accountant

question 20

Multiple Choice

What is the rationale behind the Restatement Test of accountant liability to third-parties?

• A)Potential investors should have a route of recovery even if they could not be foreseen by accountants.
• B)The general public should have a route of recovery even if they could not be foreseen by the accountant.
• C)It is only fair to hold accountants liable if they are in privity with a plaintiff.
• D)The economy will benefit if investors recognize that they have sufficient rights of recovery.
• E)Much of what accountants do is prepare work for parties that are not their clients and therefore,it makes sense for accountants to owe a duty to intended receivers.

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Definitions:

Civil Litigation Process

The civil litigation process is a legal procedure involving disputes between individuals or entities that are resolved in court, rather than through criminal prosecution.

Drafting the Complaint

The initial process of formally writing the allegations and claims made by a plaintiff initiating a lawsuit, setting forth the factual and legal basis for the lawsuit.

Preliminary Investigation

An initial inquiry or exploration of facts to determine whether there is sufficient evidence to pursue further investigation or legal action.

Initial Client Interview

The first meeting between a lawyer and a prospective client where the client's legal issues are discussed, and the lawyer assesses the case.