Cougar Mfg. Corp. retains Andrea Accountant to manage its books and prepare its financial statements. Andrea is a certified public accountant. She has become a bit bored with generally accepted accounting principles (GAAP) and has adopted some creative accounting methods. Cougar is being sued by Louisa Lender, one of its creditors. Louisa alleges that Andrea knew or should have known that Cougar would distribute the statements prepared by her to its lenders. Louisa asserts that the financial statements were negligently prepared and grossly inaccurate. What are the consequences of Andrea Accountant failing to follow GAAP? Can Louisa Lender recover damages from Andrea Accountant?

Terry Taxpayer hired Andrew Accountant, a CPA to represent him and his business in an appeal to the Internal Revenue Service. The appeal concerned audits that Terry and his businesses owed substantially more taxes. Terry Taxpayer assisted in the appeal and provided documents to Andrew Accountant. The appeal was unsuccessful. Terry sued Andrew for malpractice alleging that he would have won the case if Andrew had adequately prepared and sought a judgment forcing Andrew to pay the additional taxes. Who will win and why?