Asked by Khaly Barry on May 10, 2024
Verified
Carbon Company's liabilities exceed its assets. The firm hires Dobie, an accountant, to certify a balance sheet showing a positive net worth. Equity Bank relies on the balance sheet to make a loan to Carbon. The firm defaults. Under the Ultramares rule, Dobie is most likely not liable because he
A) did not owe a duty of care to any third party.
B) is not responsible for his client's finances.
C) finished his work before the loan and default.
D) was not in privity with the bank.
Ultramares Rule
A legal principle that limits the liability of accountants for negligence to parties with whom they are in direct contractual relationship unless fraud is involved.
Duty of Care
A legal obligation requiring individuals and entities to exercise a reasonable standard of care to avoid causing harm to others.
Positive Net Worth
The financial status where total assets exceed total liabilities.
- Comprehend the situations in which professionals might be held responsible for negligence or malpractice towards third parties.
Verified Answer
Learning Objectives
- Comprehend the situations in which professionals might be held responsible for negligence or malpractice towards third parties.
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