`Lax' Accountants Face Liability in Future, Tulsan Says

By Driskill, Matt | THE JOURNAL RECORD, May 14, 1985 | Go to article overview

`Lax' Accountants Face Liability in Future, Tulsan Says


Driskill, Matt, THE JOURNAL RECORD


Auditors and CPAs are going to find themselves more liable for the truth of their clients' financial statements than in the past according to Steven Smith, a Tulsa attorney.

Smith is the lead counsel in a $72 million class action suit brought by the depositors of the bankrupt Republic Companies against Wes McKinney, his board of directors and accountants.

"The great majority of accounting firms appear to be quite diligent in performing their duties," Smith said.

"But accountants who have become lax are going to face more damage awards for liability in the future."

Lawsuits are growing in number, Smith said, and stockholders and investors are beginning to feel that an auditor who doesn't provide accurate information to them is liable for their negligence.

Smith cited a growing number of cases involving major accounting firms which are "increasingly imposing a whistle-blowing duty upon accountants."

Traditionally, accountants have taken the position they had no duty but to their clients Smith said.

"The courts do not see it that way anymore. They feel the accountant owes an explanation to all groups that might be affected. This means a company board, the industry regulating agency and the investing public," Smith said.

"No longer can the CPA firm look the other way and claim innocence."

The free and open market is at stake, Smith said, and the failure to inform the investing public puts them at a disadvantage.

"They want to be able to trust what they are being told. Simply putting down numbers on the page is not enough anymore. The users of financial statements expect auditors to penetrate into company affairs and to disclose any possibility of fraud or illegal behavior," Smith said.

"The basic issue that we're trying to identify is, can we really rely upon these financial statements - circulated by the millions in the U.S. today - as the basis of all our investment activities?". . .

- The University of Oklahoma Legal Assistant's Program will offer a three-session course beginning in June to deal with pension and employee benefits.

Registration fee for the course is $100 per person.

The seminar will introduce participants to the basic concepts of employee compensation with emphasis on qualified employment retirement plans.

The instructor for the course will be Jon Trudgeon, an Oklahoma City attorney who specializes in pension and employee benefits. . .

- The Oklahoma Bar Association is sponsoring two seminars on real estate law and trial preparation and practice.

- Considerations which must be given when transferring property, as well as looking into some of the specific problems which arise with certain entities, will be addressed by the Association May 23 at the Sheraton Century Center Hotel in Oklahoma City.

The seminar will also consider:

- The impact of taxes.

- The effect of bankruptcy on transfers of property that must be dealt with in numerous cases.

Registration is $90 and six-hours credit may be claimed for continuing legal education. The course is approved by the Oklahoma Real Estate Commission.

- The first of several courses presented by the Central Oklahoma Association of Legal Assistants and the Oklahoma Bar Association is a seminar on the nuts and bolts of trial preparation.

This course will deal with the most common mistakes made by attorneys involving procedural problems commonly incurred by attorneys.

Oklahoma County Court Clerk Tom Petuskey, U.S. Bankruptcy Court Clerk Walter M. Mounts and U.S. District Court Clerk Francis Bonsiero will speak to the participants.

The registration fee is $85 and four credit hours may be claimed for continuing legal education. . .

- The Southwestern Legal Foundation will hold the 22nd Annual Academy of American and International Law June 2-July 12 in Dallas, which will provide an opportunity for leaders from other countries to study American and international legal and businesses institutions, with an emphasis on the legal framework necessary for economic and social development.

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`Lax' Accountants Face Liability in Future, Tulsan Says
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