New Jersey
How Ernst & Young v. J. Gordon McMurray applies in New Jersey: state-specific rules, key cases, and bar exam notes for Corporate Law.
New Jersey courts typically adhere to the principle of professional duty and care as established in Ernst & Young v. J. Gordon McMurray, particularly in the context of auditing practices. The state emphasizes the need for accountants to exercise a standard of care that reflects both the expectations of the profession and the relationship with the client.
In New Jersey, the accountants' duty of care extends to third parties under certain circumstances, particularly where a reliance on the audit report is foreseeable and specifically intended.
The court held that auditors can owe a duty of care to third parties when they are aware of the specific purpose for which the financial statements are being prepared.
This case confirmed that the professional standards applicable to accountants extend to their obligations to third parties when third-party reliance is evident.
The court found that an accountant's failure to adhere to auditing standards can be grounds for liability under New Jersey law.
New Jersey adopts a more case-specific approach regarding the scope of liability for auditors compared to the more generalized standards outlined in federal law. While both jurisdictions require adherence to professional auditing standards, New Jersey courts often emphasize the importance of mutual recognition of reliance by the client and third parties.
Questions regarding auditor liability and the duty of care for accountants are frequently tested on the New Jersey bar exam, highlighting the importance of understanding both case law and statutory frameworks.