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The Ultramares Rule. Larkin, Inc., retains Howard Perkins to manage its books and prepare its financial statements. Perkins, a certified public accountant, lives in Indiana and practices there. After twenty years, Perkins has become a bit bored with generally accepted accounting principles and has adopted more creative accounting methods. Now, though, Perkins has a problem, as he is being sued by Molly Tucker, one of Larkin’s creditors. Tucker alleges that Perkins either knew or should have known that Larkin’s financial statements would be distributed to various individuals. Furthermore, she asserts that these financial statements were negligently prepared and seriously inaccurate.
What are the consequences of Perkin’s failure to follow generally accepted accounting principles?
Under the traditional Ultramares rule, can Tucker recover damages from Perkins? Please Explain.
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