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(n46) Id.

(n47) "[P]ublic accountants now constitute a skilled professional class, and are subject generally to the same rules for liability for negligence in the practice of their profession as are the members of other skilled professions." Smith v. London Assurance Corp., 96 N.Y.S. 820, 820 (1905).

(n48) PREVITS & MERINO, supra note 30, at 202 (quoting from unidentified 1918 case).

(n49) 208 N.Y.S. 259 (N.Y. App. Div. 1925), aff'd, 152 N.E. 431 (N.Y. 1926).

(n50) See infra notes 165-66 and accompanying text.

(n51) 174 N.E. 441 (N.Y. 1931).

(n52) Id. at 449. In fact, the auditors' omissions were held to be fraudulent misrepresentations. Id.

(n53) Id. at 447.

(n54) Accountants in the 1920s did debate the financial treatments of items like surplus and no par stock that were particularly subject to manipulation by business. A major critic of the acceptance of the prevailing treatment was William Z. Ripley. Ripley suggested that the FTC should "provide guidance and leadership in improving financial reports and regulating corporate business." PREVITS & MERINO, supra note 30, at 236. But given the pedestal upon which the businessman perched in the 1920s, it was highly unlikely that the FTC (or any other governmental body) was then prepared to lead "a crusade to protect the investor." Id. More important was the apparent "casino' environment in the market and that no amount of information could have dampened the sincere belief of many that indeed the millennium had come and everyone ought to be rich. Id. (citing F.L. ALLEN, ONLY YESTERDAY (1931)).

(n55) The establishment of the SEC in 1934 did not lead to "draconic accounting rules that would significantly circumscribe the use of professional judgment." Id. at 244. Rather, the emphasis was on "full disclosure," allowing auditors to accomplish that objective as they saw fit. Some studies have advanced the theory that full disclosure would not have prevented the crash because it has never been established that investors prior to 1929 actually received inadequate information. Id.

(n56) Prior to 1929, the Exchange refused to acknowledge the need for independent audits. Id. at

  • 205.

    "Only after the crash did accountants receive the full support of the exchange." Id. at 205 &

    • n.

      8 (citing editorials in 1924, 1925, & 1926 in the Journal of Accountancy).

(n57) Audits belong in the category of attest services performed by CPA firms. There are numerous services that can be provided by CPAs and many of these services are guided by different standards. Attest services are one category which includes audits, reviews, special- purpose reports, and prospective financial statements. (CPAs also offer accounting, tax, and


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