Final answer:
CPAs are protected from liability when they exercise due professional care in their services, which includes careful planning, supervision, and data collection to reach reasonable conclusions. Ordinary negligence, gross negligence, or fraud can result in liability. Regulatory providence is not a recognized standard. The correct option is c.
Step-by-step explanation:
CPAs should not be liable to any party if they perform their services with due professional care. This concept is rooted in the standards set forth by the accounting profession, which dictates that CPAs must perform services with competence and diligence, adhering to technical and ethical standards.
It contrasts with ordinary negligence, which implies a lack of reasonable care in the performance of duties, thereby potentially causing harm to others.
Due professional care means that CPAs must carefully plan and supervise their work and obtain sufficient relevant data to arrive at reasonable conclusions. If CPAs exercise due professional care, they are typically not held responsible for honest errors or omissions.
Good faith efforts in applying professional knowledge do not constitute liability, but there is an expectation that CPAs will not be grossly negligent or engage in fraudulent activities.
Regulatory providence is not a term normally associated with professional standards in accounting, thereby making it the less relevant option. The correct option is c.