CPA group's Hunnicutt focuses on liability issue.

John Hunnicutt, the new head of government affairs for the American Institute of Certified Public Accountants, prefers the book review section of his Sunday newspaper to the business page.

Mr. Hunnicutt, you see, is not an accountant. The 55-year-old lobbyist took some accounting courses in college ago but wound up majoring sociology.

Nonetheless, he knows what makes the group's 308,000 members break out into a sweat:

"Liability. That's our No. 1 issue," said Mr. Hunnicutt, who was appointed to his new post in September. He joined the institute last year as vice president for federal affairs.

Sharing the Blame

More and more, auditors are being held liable for the financial foibles of the audited.

For banks and thrifts, which will face additional auditing and reporting requirements when a new banking law becomes effective Jan. 1, this means a higher cost of doing business.

A survey of the accounting institute's members found that claims were filed against 7% of the 1,734 responding firms during the past five years. About half of those claims have been settled according to the institute, with a median settlement of $1,000. More than one-quarter of the settlements exceeded $50,000.

Accountants have rolled the cost of those claims over to their clients. Liability accounts for 10% of the fees that many large accounting firms charge, Mr. Hunnicutt said.

Plans for Dropping Out

But CPAs still don't feel adequately compensated for the risk. As a result, 11% of the survey group plans to stop doing audits or audit reviews, which the new banking law will require of banks and thrifts.

Mr. Hunnicutt knows how to deliver the message that accountants need relief He was director of government affairs for the accounting firm KPMG Peat Marwick before arriving at the CPA institute. And his resume includes two years, 1975-77, with the Treasury Department's office of legislative affairs. The preceding eight years he worked for former Sen. Richard Schweiker, R-Pa.

"He's substantively knowledgeable, which is an asset in this business," said John Duncan, an aide to Sen. Bill Roth, R-Del.

The Senate Banking, Housing, and Urban Affairs Committee, of which Sen. Roth is a member, consults with the CPA institute on everything from auditing standards for government contractors to how well the General Accounting Office is doing, Mr. Duncan said.

New Standards Sought

Mr. Hunnicutt and the institute want repeal of laws that hold accountants jointly and severally liable in some bank failures.

Instead, the CPAs want a standard that would hold them accountable in proportion to, their actual role. A push for legislation mandating such a standard failed this year. Mr. Hunnicutt said it was too early to predict what will happen next year.

Mr. Bounds reports for the Medill News Service.

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