Professional Responsibilities: Due Care

By Colson, Robert H. | The CPA Journal, July 2004 | Go to article overview

Professional Responsibilities: Due Care


Colson, Robert H., The CPA Journal


A member should observe the profession's technical and ethical standards, strive continually to improve competence and the quality of services, and discharge professional responsibility to the best of the member's ability.

Due care is the fifth principle of CPAs' code of professional conduct. Knowledge and diligence are common components of due care. Performing professional engagements that require expertise or time that a CPA does not possess violates the principle of due care. How due care is practiced also differs with the nature of the professional service.

Professional Services

Due care involves acting for someone else's benefit or to someone else's specifications. CPAs frequently perform tax and consulting services for specific clients whose requirements or specifications can be known in great detail. Knowledge of these requirements and the relevant subject matter, along with diligence and thoroughness in fulfilling the engagement, provides these clients the due care required by the standard. The nature of due care can vary considerably depending upon the degree to which the service is specialized or personalized. The more personalized the service, the harder it becomes to apply across-the-board practices. Client satisfaction is the most meaningful assessment of due care for such services.

In contrast, because CPAs rarely know exactly who will be the ultimate user of their audits, reviews, and attestations, due care consists of exercising diligence in following the appropriate professional standards. Knowledge of the appropriate professional standards and diligence in following them are the bases for ensuring due care for these core CPA services. Because professional standards, not client specifications, constitute the base for these services, it is extremely important that engagement letters provide sufficient detail about the services. It's not necessary to detail all the relevant standards in the engagement letter, but clients should understand that, for certain engagements (usually those requiring independence), due care involves satisfying the professional standards rather than fulfilling the client's wishes. For these services, other knowledgeable and experienced CPAs become the assessor of due care. Good quality-control systems, second reviews, and aggressive professional education, as well as effective peer reviews, are the current building blocks for exercising due care for these services.

Due care can also be interpreted to mean the knowledge and diligence to satisfy the expectations of a "reasonable" person. CPAs encounter this aspect of their due care standard whenever legal due diligence is called for. …

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