Employment of an accountant is based upon certain rules and regulations. The employment contracts of accountants generally contain certain covenants. These covenants must be based upon certain elements such as good consideration, provide reasonable protection and must not cause any unreasonable burden upon the employer, employee or the public[i].
In Wiz Technology, Inc. v. Coopers & Lybrand LLP, 106 Cal. App. 4th 1 (Cal. App. 2d Dist. 2003), the court held that the resignation of the auditor was for good cause, since the company failed to satisfy the condition that was the main prerequisite to the parties’ contract. Thus, it is reasonable and permissible for an auditor to resign for good cause.
An accountant cannot hold documents given to him/her by a client, if the client fails to pay the accountant[ii]. Similarly, an accountant does not have a common law lien upon books and other materials of his/her client based merely upon possession[iii].
If the fee or compensation of a public or a certified public accountant is not fixed by the contract of employment, s/he will be entitled to get paid for the services rendered by him/her depending upon each case. A certified public accountant (CPA) who fails to register as required by statute will be denied the right to recover for his/her services[iv]. If the services rendered constitute any unauthorized practice of law, then the recovery for services rendered will also be denied[v].
If an accountant creates inaccuracies negligently and if s/he fails to report facts of serious nature, then s/he will not be entitled to any compensation[vi]. However, accountants will be entitled to recover their fees, if the services are not performed that negligently[vii].
[i] Nat’l Flood Servs. v. Torrent Techs., Inc., 2006 U.S. Dist. LEXIS 39290 (W.D. Wash. June 13, 2006)
[ii] Blum v. Blum, 769 So. 2d 1142 (Fla. Dist. Ct. App. 4th Dist. 2000)
[iii] Myra Found. v. Harvey, 100 N.W.2d 435 (N.D. 1959)
[iv] Van Horn v. Vining, 133 So. 2d 901, 907 (La. Ct. App. 1961)
[v] Agran v. Shapiro, 127 Cal. App. 2d Supp. 807 (Cal. App. Dep’t Super. Ct. 1954)
[vi] Western Surety Co. v. Loy, 3 Kan. App. 2d 310 (Kan. Ct. App. 1979)
[vii] Teunissen v. Orkin Exterminating Co., 484 N.W.2d 589 (Iowa 1992)