New Jersey bankers are fighting a bill that would protect accountants from liability when a bank bases lending decisions on their financial statements but the loans go bad.

The bill would require an accountant's written authorization before a financial statement could be used as part of a loan application or other transaction. That, accountants say, would allow them to ensure that the information is up to date and thorough enough for the intended purpose.

"All of the statements can be distributed without the accountant's knowledge, and all of a sudden he finds out that there is a suit instituted against him and he wasn't even aware that the party had a copy of the financial statement," said Raymond Johnson, executive director of the New Jersey Association of Public Accountants.

But the bankers argue that the bill would only increase paperwork and delay the loan process even more at a time when New Jersey is desperately trying to boost its economy.

"It just complicates the process," said W. Stuart Cameron, vice president of the New Jersey Bankers Association. "If they create these extra hurdles that you go over in order to have standing to sue them, it stands to reason that it will make it more cumbersome to consummate a loan. It's truly a disincentive to make loans when that type of requirement exists."

Accountants have been hit by billions of dollars in third-party lawsuits accusing them of negligence in preparing accounting statements. Those statements were used as part of financial transactions, such as major loans, that later went sour.

Forty-seven states currently have laws or judicial standards granting at least partial protection for accountants against third-party negligence claims. But New Jersey, Mississippi, and Wisconsin have no protection. "Everyone and anyone can sue," said Robert L. Garrity, executive director of the New Jersey Society of Certified Public Accountants. "Anybody possibly out there who could get a hold of the statements can sue an accountant for negligence."

And as accountants in Mississippi and Wisconsin plan similar legislative action, they are closely watching the New Jersey battle, where accountants want to overturn a 1983 state supreme court ruling establishing liability.

That has Garden State bankers hopping mad. Mr. Cameron said accountants are paid to be accurate. "If we cannot count on financial statements, what are we going to count on to make our loans with?"

Under the bill, new borrowers must provide the bank with written authorization from the accountant at the time of the loan application. After that, annual permission will be required for the bank to keep using the same financial statements.

"We're not saying that accountants can't be sued for negligence;" Mr. Johnson said. "What we are saying is that there should be a limit to the liability if the documents are being used without the accountants' knowledge."

But the bankers complain that accountants are just trying to escape blame when their financial statements result in bad loans.

"We think that's absolutely unconscionable," Mr. Cameron said. "Everybody would like to be out from under the responsibilities of negligence, but that's not the real world. Negligence is negligence, and if they're liable, they should be held accountable."

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