What is accounting responsibility?
Accounting responsibility is the ethical responsibility that an accountant has towards those who count on his work. According to the American Institute of Certified Public Accountants (AICPA), accountants have a duty to serve the public interest and maintain public confidence in the profession. An accountant has a responsibility to his clients, his business leaders, investors and creditors, as well as to external regulators. Accountants are responsible for the validity of the financial statements on which they work and they must perform their duties in accordance with all applicable principles, standards and laws.
Key points to remember
- Accounting responsibility is the ethical responsibility that an accountant has towards those who count on his work.
- The responsibility of an accountant may vary depending on the industry and the type of accounting, verification or tax preparation in progress.
- All accountants must perform their duties in accordance with all applicable principles, standards and laws.
Understanding the accountant’s responsibility
The accountant’s responsibility varies slightly depending on the accountant’s relationship with the declarant or the company in question. Freelance accountants with certain clients see confidential information, ranging from personal social security numbers to business sales data, and must respect the accountant-client privilege. They cannot share private personal or professional data with competitors or others.
Accountants who work for accounting firms also have a responsibility to keep information confidential, but they also have a responsibility to their firm. Namely, they must accurately track their hours and completed tasks. For example, an accountant performing an audit should only record the items he actually performed, rather than pretending that he completed the items he did not in order to speed up the process or reinforce his hours. recorded.
If an accountant works directly for a company, as an internal accountant, he has access to information that many other members of the company do not have, ranging from payroll figures to layoff information, and he should also treat this information discreetly. In addition to having a responsibility to the people who work in the business, internal accountants are also responsible to shareholders and creditors. If accountants do not live up to their responsibilities, this can have a large impact on the accounting industry and even on the financial markets.
Accounting Responsibility and Internal Revenue Service
Although accountants have a great deal of responsibility to their clients, if the Internal Revenue Service discovers an error in an individual’s tax return, it does not hold the preparer or the accountant responsible. The IRS instead adjusts the return and holds the taxpayer responsible for the additional taxes, fees and penalties. However, a person who has been injured by the fault of an accountant may bring a negligence action against the accountant for the fact that the accountant has failed to fulfill his obligations to the client and has caused personal or financial damage.
The IRS also accepts complaints about tax preparers who have committed fraud, and anyone with a problem can submit a complaint using Form 14157, Complaint: Tax preparer. Internal accountants who prepare books or deliberately include erroneous data in their company’s tax returns or accounting documents are responsible for professional misconduct and may even be criminally responsible.
Accounting responsibility and external audits
According to the Public Company Accounting Oversight Board (PCAOB), accountants performing external audits are responsible for obtaining reasonable assurance that the client’s financial statements are free from material misstatement, whether caused by error or fraud . The Sarbanes-Oxley Act of 2002 (SOX) added new audit responsibilities for fraud. The external auditors must now certify that the internal controls of a client are adequate in addition to expressing an opinion on the financial statements.