A Critique on Civil Liability of CPA under the Article 20-1 of Securities Exchange Act

Autor: HUANG, HSIN-I, 黃心怡
Rok vydání: 2018
Druh dokumentu: 學位論文 ; thesis
Popis: 106
A certified public accountant（CPA） expresses an opinion on financial statements based on audits and conducts his audits in accordance with the “Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants” and generally accepted auditing standards in the Republic of China（ROC GAAS）. CPA’s objectives is to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes his opinion, but reasonable assurance is not a guarantee that an audit conducted in accordance with ROC GAAS will always detect a material misstatement when it exists. The management often cover up business failures with fraudulent financial reporting. In the final analysis, investors loses is due to wrong decisions or improper judgment made by the management, or market influence. Accountants are not involved in the company's business decisions but provide information after professional diagnosis. Furthermore, an accountant’s opinion on financial statements shall be symbolized as some kind of public welfare. From this point of view, to reinforce civil law duty of an accountant should be considered more. Accountants play the role of a gatekeeper in the capital market. After a series of financial statements fraud incidents, the Supervision units created an aggravating accountant civil liability in 2005, adding Article 20-1 of the Securities and Exchange Act. According to Article 20-1, the subjective element of accountant's civil liability is negligence. To avoid excessive liability, the Supervision units also referred to the U.S. Private Securities Litigation to make accountants bear proportion liability. However, what is the subjective element applicable to CPA when he shall bear the civil liability under the Securities and Exchange Act？Our legal scholar and courts diverse on this issue. Some of them argue that the subjective element is intent, some argue that it is gross negligence, and the others argue that it is negligence. We will discuss that audit work has its inherent risks and innate limitations, this is better as when it comes to discuss about claims, will be more proper to command on actor’s subjective responsibility. Article 20 of the Securities and Exchange Act was made with reference to section 10(b) of the U.S. Securities and Exchange Act of 1934. The Supreme Court in 1976, Ernst & Ernst v. Hochfelder, held that the term “scienter”, as applied to conduct necessary to give rise to an action for civil damages under the U.S. Section 10(b) and rule 10b–5, refers to a mental state embracing intent to deceive, manipulate or defraud. In this case, the Supreme Court did not consider the question whether, in some circumstances, reckless behavior is sufficient for civil liability under the U.S. Section 10(b) and rule 10b–5. However, most Courts of Appeals have held that reckless behavior is sufficient for civil liability under the U.S. Section 10(b) and Rule 10b-5. In this thesis, we thinks that “reckless” is closer to the concept of dolus indirectus in Criminal Law. The subjective element of Article 20 shall be intent（including “reckless”）. To apply a moderate civil law sanction to CPA will increase his attention on duty, but strict liability leads accountants to refuse audit of high risk clients or leads to a brain drain in this field. Furthermore, proportion liability is a controversial regulation. In the process of legislation, we ignored the different legislative backgrounds between Taiwan and the United States, and authorized the courts to decide the proportion of responsibility, which caused the litigation procedures delayed. In this thesis, we thinks that Article 20-1 should be reformed, that accountant shall share the burden of joint and several liability with other participants, while the proportion of joint and several liability is the participants’ internal allocation problem.
Databáze: Networked Digital Library of Theses & Dissertations
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