Kang Haggerty News
In 2001, Anderson was one of the “Big Five” public accounting firms. Founded by Arthur Anderson, whose motto was “think straight, talk straight.” The Anderson firm was one of the most respected accounting firms in the world. A year later, Anderson was found guilty of obstructing justice for destroying Enron’s financial documents. Anderson shut its doors in the United States that same year and surrendered its licenses to practice certified public accounting. A few years later, Anderson settled with various Enron investors who brought claims against Anderson for its role in the Enron fraud. Since the Enron/Anderson scandal, the law relating to an accountant’s duty to nonclients has changed.
Traditionally, an accountant owes no duty to a nonclient. For instance, an accountant who prepares a financial statement containing material misrepresentation would not be liable to a nonclient, such as a bank, who relied on the financial statement to its detriment. As seen in the Enron/Anderson case, however, the landscape of accountant liability is changing. If the accountant aided in the commission of the fraud, or where the accountant knew the third-party nonclient (e.g., a bank) would be relying on the statements, the accountant may be liable to the nonclient.