Those monstrous damage awards against accountants

Huge damage awards against accounting firms continue to make the headlines, stoking plaintiffs' willingness to sue accountants, driving up settlement costs, detonating insurance premiums that were already soaring, and inspiring droves of accountants to abandon audit work in favor of less risky lines of business. By it nature, the audit function exposes accountants to huge potential liabilities. More often than not, the accountant delivered an unqualified report sufficiently in advance of the disaster that it was not predicted but sufficiently close in time that a resourceful plaintiffs' attorney aided by hindsight can identify harbingers of what was to come. Before obtaining damages from even a negligent or fraudulent accountant, the plaintiff should have to establish: 1. that the loan or investment would not have been made if accurate information had been disclosed, and 2. that the accountant's errors actually caused the loss. A discussion of the measures and types of damages, the problem of joint and several liability, and attempts at reform is presented.