Phil, a certified public accountant of ten years standing, provides chartered accounting services to Genesis Trading...

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Phil, a certified public accountant of ten years standing, provides chartered accounting services to Genesis Trading Corporation in 2005. The accounting services include preparing Genesis's financial reports and issuing opinion letters based on the reports. Relying on Phil's portrayal of Genesis's financial situation, Genesis borrows from Broadway Finance a considerable sum of money to build a new shipping facility. In lending the money to Genesis, Broadway relies on Phil's opinion letter. Phil was aware of the possibility of this reliance. In 2006, Genesis falls into serious financial trouble, but neither Phil's reports, nor his opinion letters give any hint of the possibility of this situation arising. Assume Phil did not engage in intentional fraud but was only negligent. 1. Is he liable? 2. Please complete your answer with reference to the three different views or standards regarding third-party reliance on financial reports currently employed by the courts, based on any relevant cases or laws. Phil, a certified public accountant of ten years standing, provides chartered accounting services to Genesis Trading Corporation in 2005. The accounting services include preparing Genesis's financial reports and issuing opinion letters based on the reports. Relying on Phil's portrayal of Genesis's financial situation, Genesis borrows from Broadway Finance a considerable sum of money to build a new shipping facility. In lending the money to Genesis, Broadway relies on Phil's opinion letter. Phil was aware of the possibility of this reliance. In 2006, Genesis falls into serious financial trouble, but neither Phil's reports, nor his opinion letters give any hint of the possibility of this situation arising. Assume Phil did not engage in intentional fraud but was only negligent. 1. Is he liable? 2. Please complete your answer with reference to the three different views or standards regarding third-party reliance on financial reports currently employed by the courts, based on any relevant cases or laws.

Answer rating: 100% (QA)

1 Yes Phil may be liable for negligence Despite not engaging in intentional fraud if Phil as a certified public accountant failed to exercise the leve... View the full answer