AICPA Files Successful Friend-of-the-Court Brief in Suit Against CPA Firm.AICPA AICPA See American Institute of Certified Public Accountants (AICPA). Files Successful Friend-of-the-Court Brief in Suit Against CPA (Computer Press Association, Landing, NJ) An earlier membership organization founded in 1983 that promoted excellence in computer journalism. Its annual awards honored outstanding examples in print, broadcast and electronic media. The CPA disbanded in 2000. Firm The AICPA's legal Department routinely files amicus curiae briefs in matters which may affect the CPA profession. Recently, the Institute (represented by the law firm of Allegaert Berger & Vogel LLP LLP - Lower Layer Protocol ) filed a successful brief on behalf of an accounting firm in a lawsuit filed against it by the Securities Investor Protection Corporation Securities Investor Protection Corporation (SIPC) A nonprofit corporation that insures customers' securities and cash held by member brokerage firms against the failure of those firms. (SIPC (Simply Interactive PC) An earlier umbrella term from Microsoft and Intel for a PC that works like a home appliance. For example, it has a sealed case, uses external connectors for expansion and boots in just a couple of seconds. ). On Feb. 20, the New York Court of Appeals (New York's highest court) unanimously rejected an attempt by SIPC to broaden significantly the scope of accountants' liability under New York law. The case, SIPC v. BDO Seidman, LLP, arose from BDO's audit of the 1993-1995 financial statements of the broker-dealer A.R. Baron & Co. The Security Investor Protection Act requires broker-dealers to provide their audited financial statements to the SEC and the NASD NASD See: National Association of Securities Dealers NASD See National Association of Securities Dealers (NASD). , and requires those organizations to advise SIPC if they learn that a broker-dealer is in or approaching financial difficulty. The statute does not provide for SIPC itself to receive the audit reports. After Baron's eventual liquidation, SIPC nonetheless sued BDO BDO Big Day Out (Australian music festival) BDO Banco de Oro (Philippines) BDO 1,4-Butanediol BDO British Darts Organisation BDO Block Development Officer BDO Big Dumb Object to recover its administrative costs, under theories of fraud and negligent misrepresentation. SIPC alleged that BDO's audit reports did not alert the SEC or NASD to Baron's troubles, with the result that neither of those agencies communicated any concern about Baron to SIPC, thereby delaying and increasing the cost of SIPC's ultimate action. The Court of Appeals dismissed SICP's fraud claim, noting that BDO's audit reports had, in fact, featured negative information about Baron and holding that the failure of the SEC and the NASD to pass that information along to SIPC could not reason: ably be relied upon by SIPC as a statement by BDO that Baron was in good financial condition. The court also threw out SIPC's claim for negligent misrepresentation, reiterating the rule of previous cases that an accountant may be held liable to a non-client only if, among other things, there is "linking conduct" between them that places the plaintiff and the accountant in a "relationship approaching privity A close, direct, or successive relationship; having a mutual interest or right. Privity refers to a connection or bond between parties to a particular transaction. Privity of contract is the relationship that exists between two or more parties to an agreement. ." Because BDO's audit reports were not prepared for, sent to or read by SIPC, the necessary linking conduct was absent. ?? rmiller@aicpa.org Member Satisfaction Center * Address/membership information * Orders and inquiries * Subscriptions * Confercnce registrations * Network licenses ?? 888/777-7077 ?? Voice Mail Box comments, 888/999-9252 ?? memsat@aicpa.org |
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