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Throughout the Eighties and into the Nineties thequestion of liability has become more prevalent in the practice of publicaccounting Recently the AICPA has been lobbying for liability reform incases involving negligence or malpractice by public acco untants Opposition to this lobbying has come from consumer advocacy organizationstrial lawyers associations and state public interest groups to name afew Bolinger p 53 The key to success for the AICPA according to GaryM Bolinger is creating an image as a profession performing high-quality services but facedwith excessive liability burdens that harm the public interest Bolingerp56One should not be concerned however in the pending politicaloutcome but in weighing the evidence argued by both sides and developinga sound reasonable basis Therefore the remainder of this document shallconcern itself with comparing the prevalen t arguments of both sidesagainst one another and drawing a conclusion based on the evidence Opponents of liability reform rely heavily on an idealisticconstitutional argument as well as an economic argument to foster theirpoint The main components of their argument are as follows Limitingrecovery of loss has a detrimental effect on those which are harmed by alleged negligence The cost of liability isreasonable when compared to total revenues and in light of a CPAs publicresponsibility Indemnity insurance spreads risk in the aggregatetherefore removing the element of risk at the f irm level The threat oflitigation provides public accountants with a deterrent against negligentwork Finally the results of lawsuits cause the profession itself toimplement new standards Bolinger p54The AICPA and its supporters have developed their argument basedon continued liabilitys likely effect on the profession as well as aneconomic argument The arguments in favor of liability reform include theeffect of continued liability on the availab ility of CPA services Thelikelihood of fee increases resulting from liability risk The threat ofthe inability of public accounting to obtain and retain qualifiedindividuals Bolinger p56 Finally the complexities involved in theaudit engagemen t and the subjective decision making process versus theability of a given
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