Third Party Liability in Audit

This case represents quite a relaxed approach to conflicts. It is in line with cases such as Prince Jefri Bolkiah v KPMG (1999) 1 All ER 517 (HL) and World Medical Manufacturing v Phillips Ormonde & Fitzpatrick [2000] VSC 196 (Gillard J). More traditional approaches have been more strict, not requiring identification of actual confidential information, but merely the chance of misuse, or the appearance of impropriety. See e.g. Spincode Pty Ltd v Look Software Pty Ltd (2001) 4 VR 501 (Brooking JA); Village Roadshow v Blake Dawson [2003] VSC 505 (Byrne J); Connell v Pistorino [2009] VSC 289 (Byrne J); and Nettle J in Sent and Primelife Corporation Ltd v John Fairfax Publication Pty Ltd and Hills [2002] VSC 429 (7 October 2002) where Jeff Sher QC was restrained on the basis of a brief 14 years previously he could not even remember! Whilst the liberal view might be the current law, Nettle J is now on the High Court and thus could signal a shift.

The entity in question did not receive an opinion from the audit firm this is because they are provided with few procedures, which do not suffice to provide assurance about the statements. (Fischer, et, al, 2012)Although the audit firm is supposed to come up with opinions concerning the financial position of the county, the G.A.S.B provides limited procedures for the audit firm to manipulate. (Ruppel,

financials and that had they sued on basis of gross negligence, they would have been successful. Distinction being the fact that blindly giving assent is as bad as committing fraud. To reiterate, the difference between negligence (which they sued for) itself and gross negligence is in fact a relationship that exist between the parties in dealing.

Critical Legal Thinking Which of the following three legal theories did the Court apply in making its decision in this case?

This is a New York Court of Appeals decision in 1926 adjudicated by the legendary Justice Cardozo. In this seminal case on ‘piercing the corporate veil’, the Court of Appeals finds in favor of the Defendant, Third Avenue Railway Company. The Court holds that Third Avenue, the parent company of Forty-second Street Company, which operated a rail line upon which the Plaintiff was injured, was not liable for the torts of the subsidiary. Even though the defendant owned all the stock of the subsidiary and controlled its Board of Directors, the degree of domination over the subsidiary was not considered

Throughout the case, it can be analyzed and expected to say that Deloitte & Touche have committed a breach to its fiduciary duty to Vertical Pharmaceutical at the end. Vertical Pharmaceuticals Inc., realized a huge loss as a result by Deloitte & Touche. Therefore, this shows that Deloitte & Touche did indeed breach their fiduciary duties. All the falsified reports and malpractices that were said to be revealed by Deloitte & Touche would be said to not be real by the forensic audit that was conducted. At the end, the court can rule that Deloitte & Touche did indeed breach their fiduciary duty to Vertical Pharmaceuticals.

AICPA Code of Professional Conduct principles prevents vises such as fraud that are experienced in accountancy field. Audit is the best measure of the effect of the fraud that are imposed to investors by accountants. The relationship of the investors and account holders are supposed to be affirmed through auditing to ensure accounting principles are upheld(Weirich, Pearson, & Churyk, 2010). Improper loss of the funds through propagation of the accountant officer should be treated as fraud and criminal activity that should lead to prosecution. Therefore, the paper seeks to relate two fraud cases that have been audited and presenting AICPA Code of

The fundamental question presented by the case is if Albion C. Cranson, Jr. is a partner with Real Estate Service Bureau and therefore liable for the debts incurred in purchasing typewriters form IBM. Albion C. Cranson, Jr. contended that the Real Estate Service “Bureau was a de facto corporation and that he was not personally liable for its debts “(Warner, et al., 2012, p 693).  Furthermore, it is stated “The fundamental question presented by the appeal is whether an officer of a defectively incorporated association may be subjected to personal liability under the circumstances of this case” (p. 694). The decision was that Cranson was not liable for the debt because “I.B.M. is estopped to deny the corporate existence of the Bureau, we hold

The main issue of this case is concerning whether documents a privileged. Richard Frederick is both an attorneys and an accountant which he provides both services for the Lenz family. Currently the Lenz family and their company is being investigated by the IRS. In this investigation the IRS has summoned for documents to be handed over. Most of the documents that were requested are connected to the tax returns of the Lenz family and their company. Frederick will not hand of the documents arguing attorney-client privilege. The IRS argues back that these documents are not privileged because they are documents that other accountants or CPA firms would use.

This essay will discuss the Supreme Court decision in FHR European Ventures LLP and others v Cedar Capital Partners LLC (Cedar) . The issue in this case was whether a bribe or secret commission accepted by an agent is held on constructive trust for his principal. This topic is a “relentless and seemingly endless debate” , as Sir Terence Etherton described, and that the “remedy awarded has vacillated for the last 200-odd years” . The major reason for the debate is because the principal will have propriety claim as opposed to a mere equitable compensation, if the bribe or commission is held on a constructive trust . The principal will be in a much more advantageous position if he was held to have propriety

The auditing firm has been in engagement with the company throughout the period when the fraud was being committed. One of the common and clear indicators of possible fraud was the company’s cash flow statement. The company experienced positive growth in its profits from the year 1996 through to the year 1998. However, a close analysis of the cash flow statement shows that the company had experienced negative figures of cash flow from both operating and investing activities and positive cash flow from financing activities which would not sufficiently offset the negative cash flows from operating and investing. It is therefore evident

The article “The Strange Case of Long Island Savings Bank - Or How a Contract Self-Destructed into Voidness“ briefly discusses the court case, which involves James J. Conway, Jr., chairman and CEO of Long Island Saving Bank. The article involves everything about the case such as the misdeeds of Conway for his own benefits. Being a CEO and chairman, Conway was also a partner in a law firm. The firm was controlled by him and his daughter. In the firm he also hired his daughter-in-law, who was also the director of the firm and salaried officer.

The AICPA Code of Professional Conduct stipulates that in any professional performance, a member should maintain integrity and objectivity, shall be free of the conflicts of interest and shall not knowingly facts or subordinate his or her judgment to others (AICPA, 2014, ET Section 1.100.001.01).This prompts the CPAs to express their opinions about the reliability and integrity of company’s financial statement based upon their scrutiny and analysis of firm’s books and records. Therefore, Emiliano is allowed by capa code of conduct to voice her opinion in the matter regarding pending litigation being included in the financial statement of the company. To form their opinions concerning fairness to company’s financial condition, their judgment should consider the circumstances surrounding the company. This directs them to liaise with the relevant involved patties which includes the company’s attorney and the Managing committee of such

From this case, Hedley wanted to know if it would be advisable to extend credit to a customer, Easipower. Then Hedley Byrne asked Heller who were Easipower’s bankers whether the extend credit would be advisable. Heller advised Hedley Byrne that it was appropriate to extend credit to Easipower in the form of letter stated that the Easipower was considered good for its ordinary business engagements. Thus, Hedley Byrne extended credit to Easipower and Easipower went out of business, leaving Hedley Byrne to pay the amount due to companies from whom they had brought advertising space. Therefore, Hedley Byrne sued Heller for negligence, claiming that the information given was misleading.

The lack of independence for external auditors will lead to the neglect of auditing risks (William R.K., 2003), which are the main reasons for the failure of certified accountants and professional accounting organizations. The consequence of the external auditors deprived of independence would be very serious. And there are many cases, which aroused by the failure of external auditors and most are related to the lack of independence. One famous example is the bankruptcy of Enron and the role played by its external auditor, Arthur Andersen (Todd, S., 2003). Arthur Andersen was once one of the biggest accounting companies in the world, and was canceled for the involvement in the Enron bankruptcy scandal.