S-3888.1  _______________________________________________

                         SENATE BILL 6665

          _______________________________________________

State of Washington      55th Legislature     1998 Regular Session

By Senators Roach and Goings

Read first time 01/27/98.  Referred to Committee on Law & Justice.

Establishing privity of contract for actions brought against accountants.

    AN ACT Relating to any cause of action based on negligence brought against any accountant licensed under chapter 18.04 RCW; adding a new section to chapter 4.24 RCW; and creating a new section.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1.  A new section is added to chapter 4.24 RCW to read as follows:

    (1) This section applies to any action based on negligence brought against any accountant or firm of accountants practicing and licensed under chapter 18.04 RCW in this state by any person or entity claiming to have been injured as a result of financial statements or other information examined, compiled, reviewed, certified, audited, or otherwise reported or opined on by the defendant accountant or in the course of an engagement to provide other public accountancy services.

    (2) An action under subsection (1) of this section may not be brought unless:

    (a) The plaintiff (i) is issuer, or successor of the issuer, of the financial statements or other information examined, compiled, reviewed, certified, audited, or otherwise reported or opined on by the defendant, and (ii) engaged the defendant accountant to examine, compile, review, certify, audit, or otherwise report or render an opinion on such financial statements or to provide other public accountancy services; or

    (b) The defendant accountant or firm: (i) Was aware at the time the engagement was undertaken that the financial statements or other information were to be made available for use in connection with a specified transaction by the plaintiff who was specifically identified to the defendant accountant; (ii) was aware that the plaintiff intended to rely upon such financial statements or other information in connection with the specified transaction; and (iii) had direct contact and communication with the plaintiff and expressed by words or conduct the defendant accountant's understanding of the reliance on such financial statements or other information.

NEW SECTION. Sec. 2.  This act applies to all causes of action commenced on or after the effective date of this act, regardless of when the cause of action arose.  To this extent, this act applies retroactively, but in all other respects it applies prospectively.

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