Accounting Case Summary of Ultramares Corporation v Touche 174 N.E. 441 (1932) Introduction The case of Ultramares Corporation v Touche 174 N.E. 441 (1932)was a tort law case in the United States on the question of indeterminate liability and privity. The case involved the reliance of one party (the plaintiff) on the financial statements prepared by another (the defendant) in providing a third party, the defendant’s client, with a loan. Shortly thereafter, the defendant’s client was declared bankrupt and the plaintiff brought a case against the defendant, alleging that the accountants had been negligent in their financial reporting duty and ought therefore to be liable for the loss suffered by the plaintiff. Fraud was also alleged. The case was therefore about the liability of accountants to third parties where an audit is relied upon by the third party. Issues Raised by the Case: The pertinent issue raised in this case was whether auditors or a firm of accountants could be held liable for negligence by a third party who on the strength of the audited reports or financial statement makes

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