The Impacts of Recent Legislation on Accountants' Liability
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Liability has recently become a popular issue among the accounting profession. The increasing number of claims against public accountants fTomvarious financial statement users have caused accountants to search for ways to protect themselves. Many accounting firms have converted to limited liability companies or limited liability partnerships, both of which only recently have been allowed as entity choices. Also, recent legislation, such as the Private Securities Litigation Reform Act, has been enacted to provide protection against such claims, many of which are very weak. However, while accountants feel that this protection is necessary, some members of the public feel that it may cause the profession to act differently when performing its job. The purpose of this paper is to examine the various types ofliability that accountants may encounter, provide ways that the profession can reduce this liability, and discuss recent developments that have been provided to offer the protection that accountants desire.