Also, in a Nebraska case the claim for negligent tax advice was barred by the statute of limitations. The accounting firm's negotiations with the IRS did not extend the statute of limitations under the continuous representation rule because the negotiations constituted a separate engagement outside the services covered by the original contract. Immunity from Liability for Valuation Engagements Accounting firms are often engaged to perform an audit in the context of determining a valuation for contracting parties. The courts have generally upheld the validity of contracts that established a binding valuation determination by a CPA if the intent and scope of the contract was clear and unambiguous. However, valuation contracts have been set aside when the accountant's determination failed to follow intent or when gross error in the valuation occurred.
Damages can result from any mistake by the CPA or dissatisfaction of the interested parties.
Because of the necessity for independence, judges have been given absolute immunity from civil actions for damages when acting in their judicial capacity. Likewise, in certain situations CPAs may also be afforded immunity from suit. However, in order to invoke this immunity, it is necessary for the CPA to identify the special nature of the engagement by special reference to the arbitrator role in the engagement letter. However, the CPA firm used an ordinary engagement letter without making special reference to its appointment by the parties to act as arbitrator. In the above case, one party was dissatisfied with the result and filed suit against the accounting firm.