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Eunice03
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296 CROMWELL ARMS
Oliver was selling his inn, the Cromwell Arms, and Charles was considering buying it. Charles
wrote to Oliver’s accountant, Richard, and requested information about the annual turnover
of the inn. The accountant wrote to Charles informing him that the inn’s annual sales were
‘in the region of £200,000’, adding that the information was given without any responsibility
on his part.
Charles purchased the inn and subsequently found that although several years previously
turnover had once approached £200,000, generally it was about £150,000 a year.Task 3 (2 marks)
Which of the following TWO statements are correct?
? The accountant owes a duty of care to Charles
? The accountant does not owe a duty of care to Charles
? The accountant will be liable for the losses which Charles has suffered
? The accountant will not be liable for the losses which Charles has sufferedANS
Task 3
? The accountant owes a duty of care to Charles
? The accountant will be liable for the losses which Charles has sufferedGood day sir,Pls i’m confused on why the accountant owes a duty of care to chris since it wasn’t said that the accountant knew why chris was requesting the information.I’ll appreciate if you can explain better
MikeLittle
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Hi Eunice
That’s a fair point. However … if you contact the accountant of a business and ask about the turnover of that business, 2 matters should have come into your head
1) Why on Earth is this person asking about my client’s affairs and
2) If I provide information, is it likely that that information is going to be relied uponIn answer to the first, the person asking is someone with authority (like the taxman!) or someone that is potentially interested in buying the business
The answer to the second is, Yes probably
And therefore the accountant should have exercised due care in answering Charles’s questions. It is ineffective for a professional to exclude liability for statements made in pursuit of their professional work. I remember once reading of an auditor that wrote at the foot of the audit report ‘Errors and omissions excepted’
ie Here’s the audit report but, if it’s not right, that’s ok
Oooops!
OK?
Eunice03
- Topics: 41
- Replies: 35
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Thank you sir
MikeLittle
- Topics: 26
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You’re very welcome
Eunice03
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