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Accounting firms should be liable to pay stockholders if they give a company a lave audit and it goes bankrupt at bottom a yearThe main principle in railway line that makes the merged model such a successful business entity is the detail that the crapper itself enjoys a personality that is separate and distinct from that of the members of the corporation and that of the stockholders . Only in cases where the separate corporate existence of the business has been used to perpetrate fraud or been fiction perforate and these separate individuals are made liable for the acts of the company . qualification score firms liable to the stockholders for the bankruptcy of a company inviteable to a supposedly clean audit previously issued disregards one and only(a) of the main principles of business and disregards the corporate fiction that was created by natural virtue . This liability provides the stockholders with the safety net of being able to collect from the erring accounting firm instead of the corporation who is the literal injured party in this instance . If there should be any entity that must be afforded protection , it is the company itself that relied upon the presumptively faulty auditing of the accounting firmHolding accounting firms liable to pay stockholders whenever a company goes bankrupt after the release of a clean audit also disregards one of the elements of due process which the law provides to protect all entities including juridical entities such as corporations and accounting firms .

The liability here arises from the automatic presumption that accounting firms subscribe fraudulently issued clean audits to the demise of not only the at once bankrupt corporation but the stockholders as well . This is a presumption that cannot hold outright and it has been consistently ruled by the Supreme Court that fraud is a serious allegation that must be proven and cannot be assumedWhile there is certainly a need to implement new measures to address the trouble of accounting fraud and to protect the stockholders from such acts , the breaking of the law and the business principles that have formed the foundation of most , if not all , of the financial transactions is not the way of doing it . substitute methods such as the posting of a bond in case of fraudulent audits or similar penalties can be explored and perhaps implemented ACCOUNTING Page PAGE 2 of NUMPAGES 2...If you want to get a full essay, order it on our website: Orderessay

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