Are Members of Associations Liable for the Negligence of Other Members?

Source: Bowman’s First Alert

BDO International is, in essence, an association of independent accounting firms. But an appeals court ruling says it will be a jury decision as to whether it is liable for improper auditing by its affiliate BDO Seidman. The plaintiffs, if successful, may seek recovery from the accounting firm members of BDO International.

One problem is that BDO International presents itself as one firm. It claims to exercise quality control over its member firms.

One association, DFK, has advised its members to promote themselves as members of an association of independent firms and not to use any words that imply they are one network.

To read more on this issue, see http://www.nytimes.com/2008/03/14/business/14norris.html for The New York Times article by Floyd Norris.

For more information, see Bowman’s First Alert, Vol-V No-02.

From Bowman’s First Alert, 323 Wilcrest Drive SW, Atlanta GA 30044-5253, www.bowmancomm.com.

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