LEGAL CONCEPISAFFECTINGLIABILITY Use the primary legal concepts and Prudent Person Concept(not perfection) the terms concerning accountants liability as a basis for studying legal Liability for the Acts of Others (LLP liability of auditors Lack of Privileged Communication(w/ps) Four Maior Sources of Auditors' Legal liability 1. Client -liability to client under common law 2. Third party -liability to third parties under common law 3. Liability under federal securities laws-SH suit 4. Criminal liability- Intent to deceive L灬 boecker Andina&EArens, Loebbecke; Auditing, 8/E ©2000 Prentice Hall, Inc, Use the primary legal concepts and the terms concerning accountants’ liability as a basis for studying legal liability of auditors. LEGAL CONCEPTS AFFECTING LIABILITY Prudent Person Concept (not perfection) Liability for the Acts of Others (LLP) Lack of Privileged Communication (w/p’s) Four Major Sources of Auditors’ Legal Liability 1. Client - liability to client under common law 2. Third party - liability to third parties under common law 3. Liability under federal securities laws – SH suit 4. Criminal liability – Intent to deceive