Auditors beware: key factors can lead to lawsuits.

The number of lawsuits and the dollar amount of damages awarded in proceedings against accountants have increased significantly in the past two decades. One researcher reported that between 1962 and 1987, more lawsuits were filed against accountants than in the entire history of the profession and that the largest accounting firms collectively have paid more than $250 million in settlements of mostly audit-related lawsuits since 1980.(1) Because of our research, we are able to identify the key factors that contribute to this trend of growing litigation against auditors. Increased use of financial statements has led to an attitude that investors and creditors are consumers of financial information and, therefore, are entitled to expect more from their purchases than they did in the past.(2) The public perceives that an audit precludes publication of misleading financial statements and that the financial reporting system warns financial statement users of impending business failure.(3) Although Statement on Auditing Standards No. 30 maintains that the auditor is not an insurer or guarantor of the financial statements, the public perceives the auditor in that role. The public's perception that an auditor acts as a "guarantor" of financial statements is part of a body of misperceptions known as the "expectations gap." These misperceptions have resulted in an increasing number of lawsuits against auditors. Nine Statements on Auditing Standards were issued in 1988 specifically to address these misperceptions. The trend of court decisions and changes in legal statutes may also contribute to an increase in the number of audit-related lawsuits. The court's application of the "fraud on the market" theory, the product liability rule, and legal statutes have increased auditors' exposure to litigation. Under the "fraud on the market" theory, some courts have ruled that investors need not have been aware of the misrepresentation if reliance on the financial statements by other investors affected the price of the security.(4) The product liability rule holds that auditors are responsible for the quality of their work product and for passing these costs to their clients. Because these trends of litigation have developed, auditors have an acute need to recognize factors that may lead to increased exposure to litigation. Recognizing these factors may help auditors minimize their exposure. Auditors have a legal liability under both common and statutory law. Common law is unwritten, has evolved through court decisions rather than government statutes, and is state-dependent. If no precedent exists, a court may look to cases in other states, but is not bound to follow such cases. Statutory law is created through legislation. A court is bound by statutory law unless the statute violates the federal, or a state, constitution. A court makes its own interpretations if the statutes are unclear. Legal liability in auditing extends to two groups: clients and third parties. Liability Under Common Law Auditors' common law liability to clients generally falls into two categories: breach of contract and tort. The typical case would allege both breach of contract and tort. For breach of contract, the client alleges that the auditor did not fulfill the requirements of the contract. A suit in tort (a civil wrong other than breach of contract) may be filed by a client to claim ordinary negligence, gross negligence, or fraud on the part of the auditor. These performance criteria are part of a continuum along which the auditor's performance can be judged.(5) As Figure One illustrates, auditor performance may range from innocent to fraudulent behavior. Innocence is the belief, with adequate basis, that the opinion is correct. Errors in judgment occur when the auditor believes, but with debatable basis, that the opinion is correct. Ordinary negligence is the failure to exercise due professional care, whereas gross negligence is a reckless departure from due care. Gross negligence may be also considered to be constructive fraud. Fraud requires the element of intent to deceive. On this continuum, there are three important "gray areas." The distinction between errors of judgment and ordinary negligence is important because auditors are not liable for errors of judgment but may be held liable for ordinary negligence. Where does the distinction between errors of judgment and ordinary negligence lie? The "prudent man" concept, as expressed in Cooley on Torts, describes a professional's obligation for reasonable care as follows: Every man who offers his services to another, and is employed, assumes the duty to exercise in the employment such skill as he possesses with reasonable care and diligence. In all these employments where peculiar skill is prerequisite, if one offers his service, he is understood as possessing the degree of skill commonly possessed by others in the same employment, and if his pretensions are unfounded, he commits a species of fraud upon every man who employs him in reliance on his public profession. But no man, whether skilled or unskilled, undertakes that the task he assumes shall be performed successfully, and without fault or error: he undertakes for good faith and integrity, but not for infallibility, and he is liable to his employer for negligence, bad faith, or dishonesty, but not for losses consequent upon pure errors of judgment.(6) The distinction between ordinary negligence and gross negligence appears to be the most troublesome to determine.(7) Although there is an inherent problem in providing unambiguous definitions of any of these pairs of verbal terms, judges in different districts, faced with different circumstances, are most likely to render somewhat inconsistent decisions in distinguishing between ordinary negligence and gross negligence. The distinction between gross negligence and fraud depends on whether there is intent to deceive. In Ernst & Ernst v. Hochfelder, (425 U.S. 185, 1976), the Supreme Court defined scienter as "a mental state embracing intent to deceive, manipulate, or defraud."(8) The client-plaintiff has the burden of proof in a suit against the auditor under common law. The plaintiff must prove that the auditor accepted a duty of care and breached that duty, the client suffered damages, and there exists a close causal connection between the auditor's breach and the client's damages.(9) Third Party Liability Auditors also have liability to third parties under common law. Third parties cannot sue for breach of contract because of lack of privity but can sue in a tort action for ordinary negligence, gross negligence, or fraud. The burden of proof in such cases is upon the third party-plaintiff to prove the elements of duty of care, breach of that duty, damages suffered, and a causal connection between the auditor's actions and the plaintiff's losses. A plaintiff who can prove gross negligence or fraud can recover damages or losses suffered in any state; however, ordinary negligence recoveries vary by state. Until the late 1960s, CPAs were liable under common law only to their clients for ordinary negligence.(10) In 1931, the Supreme Court of New York decided the case of Ultramares Corp. v. Touche, Niven & Co. The Ultramares Doctrine was a product of that decision. The court ruled in favor of the auditor and stated: If a liability for negligence exists, a thoughtless slip or blunder, the failure to detect a theft or forgery beneath the cover of deceptive entries, may expose accountants to a liability in an indeterminate amount for a indeterminate time to an indeterminate class. The hazards of a business conducted on these terms are sufficiently extreme to enkindle doubt whether a flaw may exist in the implication of a duty that exposes to these consequences.(11) The court reaffirmed this doctrine in Credit Alliance Corporation v. Arthur Andersen & Co.(12) The court stated that certain prerequisites must be met for an auditor to be held liable to third parties for ordinary negligence: an awareness by the auditor that the financial statements were to be used for a particular purpose by a known third party and the existence of some conduct by the auditor that links the auditor to the third party.(13) Satisfying these prerequisites establishes a third party beneficiary status. The Ultramares Doctrine is not a federal ruling, but it has been followed in several states. The impact of the Ultramares Doctrine has been diminished somewhat by the Restatement of Torts rule and the Rosenblum rule. The Restatement of Torts rule is not a binding legal expression, but merely the opinion of legal scholars about what the common law should be in each state. The rule extends the auditor's liability for ordinary negligence to third parties who are members of a limited class of known or intended beneficiaries of audited financial statements. The Rosenblum rule extends the liability beyond the Restatement of Torts rule to cover all those whom the auditor should reasonably foresee as recipients of audited financial statements.(14) The evolution of the auditor's liability to third parties for ordinary negligence shows that decisions vary among the states depending on the precedent being followed. On one extreme, the Ultramares Doctrine (as modified by Credit Alliance) holds the auditor liable for ordinary negligence only to known third parties who can link their claim to the auditor's conduct. On the other, the Rosenblum rule holds the auditor liable for ordinary negligence to any foreseeable third party. Figure One Range of Misinterpretation

Error of Gross Innocence Judgment Negligence Negligence Fraud Believed Believed Believed Without Known with with with belief in to be adequate debatable inadequate the truth false basis basis basis of a

statement Adapted: Guy and Alderman, 1987 Liability Under Statutory Law Auditors are also liable to third parties under several legislative provisions. The Securities Act of 1933 (the 1933 Act) holds accountants liable for purchases of securities that contain material misrepresentations within the registration statement. A purchaser who files suit under Section 11(a) of the 1933 Act must prove only that the security was part of the offering covered by the registration statement and that the financial statement was false, or misleading, or material information was omitted. Unlike cases governed by common law, the burden of proof lies with the auditor to prove due diligence under Section 11 (a). Other defenses include proving that the financial statements are not false, misleading, or incomplete; the misstatement or omission was not material; the plaintiff knew about the misstatement or omission at the time of purchase; the loss was not caused by the statements; or the statute of limitations has expired. The Securities Exchange Act of 1934 (the 1934 Act) regulates the trading of previously-issued securities. Section 10(b) and Rule 10b-5 have been common sources of litigation against auditors under the federal securities acts. In general, these provisions make it unlawful for any person to manipulate, contrive, or employ any device to defraud another in connection with the sale or purchase of a security.(15) The plaintiff must prove the materiality of the alleged false, misleading, or omitted statement; the auditor's knowledge of such; reliance upon the statements; and actual damages this reliance caused. Another threat to the auditor exists because of the Racketeering Influenced and Corrupt Organizations (RICO) section of the Organized Crime Control Act of 1970. Although the act was intended to be used against organized crime, the provisions were written so broadly that, in the early 1980s, legitimate businesses were charged with doing business through a "pattern of racketeering."(16) Section 1962(c) of RICO makes it illegal to injure persons in their business or property by reason of a defendant's participation in the conduct of an enterprise through the use of a pattern of racketeering activities. Three key elements of a RICO suit are the racketeering activities covered by RICO, the defendant's engagement in a pattern of such activities, and the enterprise that is injured by the racketeering activities.(17) How does the RICO section apply to auditors? Racketeering activities covered by the RICO statute include mail fraud, wire fraud, and fraud in the sale of securities. A pattern of racketeering activities is defined as at least two acts of racketeering activities within a ten-year period. The plaintiff need only show that the acts were related to, or had some effect upon, the affairs of the enterprise.(18) For example, an auditor could be sued under the RICO section if a creditor relied upon financial statements, and the company subsequently went bankrupt. If the certified financial statements were sent through the mail to the creditor in two years of a ten-year span, a pattern of racketeering activities may be established. RICO is a triple threat because the act provides for treble damages and attorney's fees. Thus, the RICO statute has broadened the auditor's exposure to legal liability. In Schact v. Brown, the Seventh Circuit specifically upheld the application of the RICO statute to three accounting firms in its statement: Congress chose to provide civil remedies for an enormous variety of conduct, balancing the needs to redress a broad social ill against the virtues of tight, but possibly overly astringent, legislative draftsmanship.(19) Auditors are also subject to criminal liability under a number of state and federal statutes including the 1933 Act, the 1934 Act, mail fraud statutes, the general false statement statute, the Uniform Securities Act, and state criminal fraud acts. The plaintiff in these lawsuits is the U.S. Justice Department or a state attorney general. No damages are necessary, but the plaintiff must prove the violation of a criminal statute. The auditor's defense is that he or she acted in good faith (complied with Generally Accepted Auditing Standards - GAAS) and was not reckless.(20) Case Focus An analysis of audit-related court cases filed against U.S. Big Eight accounting firms between 1975 and 1988 is the focus of this study. Big Eight firms were selected because larger public accounting firms may be more susceptible to loss from litigation than are smaller firms. There is higher exposure to risk and greater difficulty in monitoring the quality of work performed by the staff. Also, Big Eight firms audit most of the publicly-traded clients. The sheer number of pronouncements relating to publicly-traded companies and the increased level of monitoring of these companies' financial statements by the SEC and other federal agencies make Big Eight firms more vulnerable to litigation claims. Only audit-related lawsuits were considered in this study. Researchers Kent St. Pierre and James Anderson reported that approximately two-thirds of the cases they examined concerned audit-related litigation.(21) Such findings are intuitively obvious because the nature of audit services naturally leads to greater potential for litigation than do tax or management advisory services. Also, auditing is generally regarded as the primary area of activity by Big Eight firms. This study includes only lawsuits filed by clients or third parties that went to trial. Lawsuits that were filed but were settled out of court were not considered because there is little public information about private settlements between potential litigants. The ultimate outcome of lawsuits was similarly ignored. In many cases, the ultimate outcome may be in doubt for an extended period because of the appeal process. In addition, a public accounting firm incurs costs even if it "wins." Those costs include damage of reputation, legal fees for defense against the claim, and time lost in preparing a defense. Table One

THIRD PARTIES

Client Investor Creditor Other Total Breach of Contract 3 1 0 4 8 Suits in Tort: Ordinary Negligence 5 9 2 5 21 Gross Negligence 0 1 2 1 4 Fraud 0 8 3 4 15 TOTAL 8 19 7 14 48 The system used to index court cases does not identify cases filed by type of defendant. Thus, a strategy for identifying cases of interest was developed. The study used a "key word" search of relevant data bases. Three data sources were used: the Ninth Decennial Digest, an index that covers state and federal court cases; the Westlaw data base; and the Lexis data base. The search was conducted using the name of each Big Eight accounting firm. These sources provided citations for 108 cases. Each of the 108 cases was located and scanned briefly to determine its applicability to the study. Cases that dealt with the same set of financial statements as a previously-selected case, involved no audit work, or provided insufficient information for analysis were excluded from further consideration. Thirty-eight cases were determined to be relevant for this study. (The appendix contains a listing of each case that was considered in the study.) As each of these cases was briefed, the following information was recorded: the plaintiff, the allegations, the basis for the allegations, and the industry of the client company. Other relevant conditions, such as bankruptcy proceedings of the client, presence (or allegations) of management fraud, and use of the financial statements for business combinations, also were recorded. Of the 38 lawsuits, 33 (87 percent) were filed by third parties. Because a client's financial statements may be relied upon by a large number of third parties, the percentage of lawsuits filed [TABULAR DATA FOR TABLE TWO OMITTED] by third parties should be much higher than the percentage filed by clients. Investors filed 19 of the 33 third party lawsuits (8 of these 19 were class action suits). Five third-party lawsuits were filed by creditors, and the remaining nine were filed by other third parties, primarily trustees in bankruptcy. The auditor was sued by the client in only five (13 percent) of the cases. Figure Two shows the percentage of cases according to the relationship of the plaintiff. The Allegations The alleged common law violations against auditors included ordinary negligence, gross negligence, and fraud. In total, 26 cases involved common law charges. In these cases, allegations involved various combinations of charges of ordinary negligence, gross negligence, and fraud. Breach of contract was also alleged in about one-third of the cases. The number of allegations exceeded the number of cases because multiple charges were filed in many lawsuits. The general allegations were that the auditor knew or should have known that the financial statements were misleading. Ordinary negligence and fraud were the most frequent charges in these cases. Table One summarizes the frequency of alleged common law violations. There were 58 claims of statutory law violations in 28 cases. Negligent or fraudulent conduct in violation of the SEC Acts of 1933 and 1934 were charged in 23 cases. Sixteen of the 23 cases specifically included violations of Sec. 10(b) and Rule 10(b)5 of the 1934 Act. In five cases, the plaintiff alleged that the auditor, through gross negligence and reckless disregard for the accuracy of the financial statements, aided and abetted others in the intentional misrepresentation of the financial statements. RICO charges were alleged in five cases. All five were heard in 1985 or later. Table Two summarizes the frequency of alleged statutory law violations. Fourteen cases contained allegations of both common law and statutory law violations. Nine cases alleged violations of GAAP; another nine alleged violations of generally-accepted auditing standards (GAAS). Three of these cases involved alleged violations of both GAAP and GAAS. Although only 15 cases specifically alleged GAAP or GAAS violations, or both, violations of both GAAP and GAAS were implied in all cases because "material misrepresentations or omissions" in the financial statements were alleged in every case. Specific allegations involved over-statements of assets, revenue, net income, or net worth. Figure Three shows the number of allegations according to the type of financial statement misrepresentation. The level of difficulty in an audit engagement may well influence the number of claims filed against an audit firm and may be a function of the complexity of the client's industry. The existence of special audit guides for different industries suggests that the level of complexity of auditing the financial statements of those clients differs according to the industry. Researcher Carl Warren found that the incidence of qualified opinions was related to the industry of the client.(22) Consistent with findings reported earlier by St. Pierre and Anderson, the finance, insurance, and real estate industry poses the greatest risk of exposure for the auditor. Forty-five percent of the cases involved the finance, insurance, and real estate industry even though this industry constitutes only 16 percent of all corporations.(23) St. Pierre and Anderson suggest that the complexity of the industry explains the frequency of the lawsuits. Table Three [TABULAR DATA FOR TABLE THREE OMITTED] shows the percentage of cases by industry of the client company and the percentage of all corporations within that industry. Bankruptcy was a factor in 20 of the 38 cases. The general allegations were that the financial statements failed to reveal the poor financial position of the company under audit, and the auditor failed to question the company's ability to continue as a viable business. Management fraud was a factor in ten of the cases. Management was alleged to have misappropriated assets or concealed the poor financial position of the firm under audit. Business combinations were involved in seven of the cases. Generally, the company under audit was acquired and later determined to be in a poor financial condition. Figure Four shows the percentage of cases that contained these and other attributes. Looking Ahead Litigation is a constant threat to the auditing profession. Based on the findings of this study, auditors are most likely to be sued by an investor after the bankruptcy of a finance, insurance, or real estate company. Investors would allege that assets were overstated, and auditors would be charged with common law negligence or violation of SEC rules under section 10(b) or rule 10b-5. Publicly-traded companies provide the greatest exposure to litigation for auditors as shown by the number of SEC act charges. The finance, insurance, and real estate industry is the most frequently involved in audit-related litigation. Clients' bankruptcy proceedings appear to be a major factor in suits against auditors. Because audit firms are frequently the only solvent party left in the aftermath of corporate bankruptcy, they become the target of lawsuits by disgruntled investors and creditors. In addition, the trend in court decisions (e.g., rejection of the Ultramares Doctrine and application of the RICO statute) has expanded the classes of people to which auditors are liable. Auditors may be able to reduce exposure to the risk of litigation by more effective planning of the audit. Because overstatements of receivables and inventory were factors in several cases, particular care should be exercised in these phases of an audit. Detection of management fraud, although not the primary purpose of an audit, continues to be an area of important litigation for auditors. Auditors must take all of these factors into consideration during the planning stage for audits. 1 Mednick, Robert, "Accountants' Liability: Coping with the Stampede to the Courtroom," Journal of Accountancy, September, 1987, 118-122. 2 Defliese, Philip L., Henry R. Jaenicke, Jerry D. Sullivan, and Richard A. Gnospelius, Montgomery's Auditing, Tenth Edition, John Wiley & Sons, New York, N.Y., 1984. 3 Conner, Joseph E., "Enhancing Public Confidence in the Accounting Profession," Journal of Accountancy, July 1986, 76-83. 4 Minow, Newton N., "Accountants' Liability and the Litigation Explosion," Journal of Accountancy, September, 1984, 70-86. 5 Guy, Dan M., and C. Wayne Alderman, Auditing, Harcourt Brace Jovanovich, 1987. 6 Ibid, 106. 7 Schultz, Joseph J., and Kurt Pany, The Accounting Review, April 1980, 319-326. 8 Ernst & Ernst v. Hochfelder, 425 U.S. 185, 96 S. Ct. 1375, 47, L.Ed.2d 668, 1976. 9 Guy and Alderman, loc. cit. 10 Ibid. 11 Ultramares Corp. v. Touche. Niven & Co., 74 N.E. 441, 446 (N.Y. 1931). 12 Credit Alliance v. Arthur Andersen & Co., 493 N.Y.S.2d 435 (Ct. App. N.Y., 1985). 13 Guy and Alderman, loc. cit. 14 Ibid. 15 Ibid. 16 Defiliese, loc. cit. 17 Ruhnka, John C. and Edward J. Gac, "RICO Claims Against CPAs," The CPA Journal, December 1987, 26-42. 18 Ibid. 19 Schact v. Brown, Nos. 82-2088, 82-2089, 82-2090, (7th Circuit, April 8, 1983). 20 Guy and Alderman, loc. cit. 21 St. Pierre, Kent, and James A. Anderson, "An Analysis of the Factors Associated with Lawsuits Against Public Accountants," The Accounting Review, April, 1984, 242-263. 22 Warren, Carl S., "Uniformity of Auditing Standards," Journal of Accountancy Research, Spring 1975, 162-176. 23 Statistics of Income Bulletin, Department of the Treasury, Internal Revenue Service, Washington, D.C., Fall 1989. Appendix Cases Selected For the Study 1. Rich v. Touche Ross & Co., 415 F.Supp. 95, 1976. 2. Jenson v. Touche Ross & Co., 335 N.W.2d 720, Minn. 1983. 3. Lewis v. Berry, et. al., 101 F.R.D. 706, 1984. 4. Chemical Bank v. Arthur Andersen & Co., 552 F.Supp. 439, 1982. 5. La Salle National Bank v. Arthur Anderson & Co., et.al., 531 F.Supp. 702, 1982. 6. Gilman Brothers, Inc. v. Peat. Marwick, Mitchell & Co., 486 F.Supp. 785, 1980. 7. Credit Alliance v. Arthur Andersen & Co., 493 N.Y.S.2d. 435 (Ct.App. N.Y., 1985). 8. Hormel International Corporation v. Arthur Andersen & Co., 390 N.Y.S.2d 457, 1977. 9. G.I. Export v. Arthur Andersen & Co., 78 F.R.D. 494, 1978. 10. Jacobson v. Peat, Marwick, Mitchell & Co., 445 F.Supp. 518, 1977. 11. Moskowitz v. Arthur Andersen & Co., 464 F.Supp. 1246, 1979. 12. Lincoln Grain, Inc. v. Coopers & Lybrand, 338 N.W.2d 594 (Neb. 1984). 13. Frymire v. Peat, Marwick, Mitchell & Co., 657 F.Supp. 889 (D.Ct.Ill., 1987). 14. Eastern Corporate Federal Credit Union v. Peat, Marwick, Mitchell & Co., 639 F.Supp. 1532 (D.Mass. 1986). 15. Bank of America National Trust and Savings Associations, et.al. v. Touche Ross & Co., et.al., 603 F.Supp. 351, 1985. 16. Haddon View Investment Co. v. Coopers & Lybrand, Ohio, 436 N.E.2d 212, 1982. 17. MacKethan v. Peat, Marwick, Mitchell & Co., 439 F.Supp. 1090, 1977. 18. Morse v. Peat, Marwick, Mitchell & Co., 445 F.Supp. 619, 1977. 19. Capital Mortgage Corporation v. Coopers & Lybrand, 369 N.W.2d 922 (Mich. App., 1885). 20. Hasbro Bradley, Inc. v. Coopers & Lybrand, 503 N.Y.S.2d 792 (A.D.1Dept., 1986). 21. Wait Radio v. Price Waterhouse, 691 F.Supp. 102 (N.D.Ill., 1988). 22. Baehr v. Touche Ross & Co., 62 B.R. 793 (E.D.Pa. 1986). 23. Briskin v. Ernst & Ernst, 398 F.Supp. 997, 1975. 24. Holland v. Arthur Andersen, 70 B.R. 729 (D.Ct.Ill. 1987). 25. Miskin v. Peat, Marwick, Mitchell & Co., 658 F.Supp. 271 (S.D.N.Y., 1987). 26. The Limited, Inc. v. McCrory Corp., et. al., 645 F.Supp. 1038 (S.D.N.Y. 1986). 27. Painters of Philadelphia District Counsel No. 21 Welfare Fund v. Price Waterhouse, 699 F.Supp. 1100 (E.D.Pa. 1988). 28. American International Securities Litigation, 606 F.Supp. 600, 1985. 29. Briggs, et. al. v. Sterner, et. al., 529 F.Supp. 1155, 1981. 30. Begier v. Price Waterhouse, 81 B.R. 303 (E.D.Pa. 1987). 31. Posner v. Coopers & Lybrand, 92 F.R.D. 765, 1981. 32. Vanderbilt Growth Fund v. Superior Court, App. 164 Cal. Rptr. 621, 1980. 33. Shofstall v. Allied Van Lines, Inc., et. al., 455 F.Supp. 351, 1978. 34. Togut v. Arthur Andersen & Co., 39 B.R. 88 (D.C. 1984). 35. Goss v. Crossley, et. al., 567 F.Supp. 609 (1983) 36. Alexander & Baldwin, Inc. v. Peat, Marwick, Mitchell & Co., 385 F.Supp. 230 (1974) 37. Luce v. Arthur Andersen & Co., 76 F.D.R. 351, 1977. 38. Tucker, et. al. v. Arthur Andersen, et. al., 7 F.R.D. 124, 1980. JAMES H. THOMPSON, Ph.D., CPA, is a member of the Oklahoma Society of Certified Public Accountants, the American Society of Certified Public Accountants, and the American Accounting Association. He has published numerous articles on financial accounting and auditing topics and writes continuing professional education materials for the AICPA. His articles have appeared in Accounting Horizons, Advances in Accounting, The CPA Journal, The EDP Auditor, The Practical Accountant, Research in Accounting Regulation, National Public Accountant, and Journal of Accountancy. He has taught accounting and auditing Continuing Professional Education courses throughout the Southeast and Southwest. EARNESTINE S. QUINN, CPA, MBA, is a member of the Arkansas Society of Certified Public Accountants and the America Society of Certified Public Accountants. She is a former instructor of accounting at Arkansas State University and the University of Mississippi. She is completing her dissertation for a Ph.D. degree in accounting at the University of Mississippi.