A Study On Civil Liability System Of Certified Public Accountants In China

Since China rebuilt CPA institution, due to relative legislation delay, the CPA profession has encountered lawsuit outbreak after experiencing relatively loose legal regulation, where the CPA civil liability issue aroused great concern in the society and academia. It also exposed many problems existing in China’s CPA civil liability system for a long time. CPAs, as experts, have duty of loyalty to their clients, as well as duty of high attention to clients and third party. Due to the limitations of audit, the accountant can only achieve reasonable attention, resulting in “reasonable assurance”. The quality of the auditing services provided by CPA, not only affects performance of the contract, more importantly, also impacts the interests of public investors, which requires CPAs to stand in an independent position with their responsibility to the third party strengthened. Because there is an audit contract between CPAs and their clients, the clients generally resort to hold the CPA liable for breach of contract applying strict liability, which legal basis include provisions relating to liability for breach of contract, and on the commission contract of "Contract Law". As regard to CPA’s civil liability for third party, we recognize it as tort liability, which apply to Tort Law. Besides, the 12 th Judicial Interpretation in 2007 is of significance to the issue of tort liability to third party. As to doctrine of liability fixation, the current legislation provides for fault liability based on the tort liability law, however, applying presumption of fault principle is more reasonable, which is more conducive to protecting the interests of third party. And the tort liability’s components include false reporting behavior, subjective fault, the loss and causation between the illusive states and the loss, in which the Auditing Standards plays an important role in determining whether or not CPAs constitute a tort liability. In terms of accountability of torts, because CPA profession has just started in our country and many relative systems do not fully implemented, we should make limitations on the range of CPA’s compensation.