An auditor knew that the purpose of her audit was to render reasonable assurance on financial statements that were to be used for the application for a loan; the auditor did not know the identity of the bank that would eventually give the loan. Under the Restatement of Torts approach to liability, the auditor is generally liable to the bank which subsequently grants the loan for:

Q: sely related. Concluded that auditors could be liable to third parties who were not in privity with…

A: An Auditor is appointed by a company in order to execute an audit. An auditor can be either…

Q: Typically, bankers require potential borrowers to provide audited financial documents with their…

A: Financial statement auditing is described as reviewing an entity's financial statements and other…

Q: Kay & Lee LLP was retained as the auditor for Holligan Industries to audit the financial statements…

A: Audit is defined as the examination of the books of accounts of the company through auditor followed…

Q: Which of the following statements is incorrect? A bank providing a loan to the entity is not a…

A: D) An entity needs to disclose if it has a common director with another entity because there might…

Q: During the audit of Albert Eistein, what relevant assertion should be used to record loans…

A: “Since you have asked multiple questions, we will solve the first question for you.  If you want a…

Q: For each situation, identify the appropriate audit report and briefly explain the rationale for…

A: Auditors report is a formal document prepared by the external auditor after the completion of audit…

Q: In order to make sure that loans are properly classified, the auditor would:   a. Examine due…

A: Audit is an independent examination of the financial staemetnts of an entity to present a true and a…

Q: Which of the following is a reason that auditors consider any debt covenants? O to determine the…

A: The question is related to Auditing. Debts covenants are certain restrictions that are imposed by…

Q: Auditors may be held liable to both their clients and third parties under common law. a. What must…

A: An auditor has an obligation to their clients and third part to exercise due professional care.…

Q: How do auditors interact with third parties to gain audit evidence when auditing debt and equity?…

A: Introduction: An auditor is someone who is authorized to review and verify the accuracy of bank…

Q: What are some of the similarities and differences between evidence in a legal case and evidence…

A: Financial statements are descriptions of a company's monetary results, financial status, and cash…

Q: Below

A:

Q: Audit independence in fact is most clearly lost whena. A public accounting firm audits competitor…

A: Audit independence means while doing audit of various firms, auditor should be independent.

Q: In comparison to the burden of proof required of plaintiffs in civil lawsuits against independent…

A: In comparison to the burden of proof required of plaintiffs in civil lawsuits against independent…

Q: Bankers usually insist that prospective business borrowers submit audited financial statements along…

A:

Q: A. The existence of loans. B. The completeness of loans. C. Related disclosures pertaining to…

A: Assertions are claims made by the management of the company which are further verified by the…

Q: If the auditor expresses an adverse or disclaimer of opinion on the complete set of…

A:

Q: Analyze each of the following situations below and provide your assessment of the potential…

A: An auditor is a person who is authorized to assess and verify the accuracy of financial papers, as…

Q: In the audit of Emerson College, the auditor's found the client's working capital to be far below…

A: Situation Here the situation was in the audit of Emerson college it is identified from the auditors…

Q: f the auditor obtains sufficient evidence on a client's accounts receivable balance through…

A: EOM paragraph provide by the auditor when he wants to explain some audit procedures or matter that…

Q: What type of opinion is issued by the auditorr if he or she is unable to determine the overall…

A: Introduction: The act of examining, confirming, and analyzing all financial information and papers…

Q: When investors sue auditors for damages under section 11 of the Securities Act of 1933,they must…

A: The Securities Exchange Act 1934:   "The Securities Exchange Act 1934 controls everyday trading of…

Q: During the review of loan contracts and agreements, the auditor would most likely figure out the…

A: Answer: The responsibility of auditor is to test the assertions with respect to the financials…

Q: Choose the one correct answer Which of the following statements is valid relating to confirmation…

A: Auditing means the independent checking of company operation by outsider. Auditor is  qualified and…

Q: determine its proper allowance for loan losses

A: Option a is wrong because by making visits to the business sites, auditor cannot help in determining…

Q: If a bank is in a 'state of continuing inability or unwillingness to maintain a condition of…

A: Liquidity is the risk to a bank's earnings and capital arising from its inability to timely meet…

Q: The following are independent audit situations for which you are to recommend an appropriate audit…

A: “Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…

Q: Which of the following would be the auditors’ most likely defense in an action broughtunder the…

A: The Securities Exchange Act 1934: "The Securities Exchange Act 1934 controls everyday trading of…

Q: In the audit of loans payable, which of the following audit procedure would be most likely performed…

A: Answer: Audit procedures are the methods that are followed by Auditors during the period of audit of…

Q: Which of the following questions would auditors most likely include on an internal control…

A:

Q: Why do you think the loan officer suspected that the accounts had not been adjusted prior to the…

A: 1. Rule of Adjustments - .In an accrual basis of accounting all Income and Expenses incurred during…

Q: What is the primary difference between fraud and errors in financial statement reporting

A:

Q: Explain why, in verifying bank reconciliations, most auditorsemphasize the possibility of a…

A: Auditing refers to an independent examination of financial information of any organization. The sole…

Q: discuss the type of opinion is issued by the auditorr if he or she is unable to determine the…

A: Introduction: Auditing is the process of verifying, validating, and continuously investigating all…

Q: The auditor should ordinarily send confirmation requests to all banks with whichthe client has…

A: Positive confirmation request is the inquiry made by the auditor about the account balance of a…

Q: When the guarantor (the guarantor) violates the terms of the guarantee in the case of a letter of…

A: Answer: If any guarantor fails to comply the terms of letter of guarantee there is obligation in the…

Q: Which of the following statements regarding auditors’ liability under the Securities Act of1933 is…

A: Auditors are liable for some liabilities under Securities Act of 1933. The act relates to the…

Q: When creditors who relied on an entity’s audited financial statements suffer monetary lossesafter a…

A: Audited Financial statements are those statements that include the auditor's independent reports and…

Q: The following are independent audit situations for which you are to recommend an appropriate audit…

A: Auditing: Auditing refers to an independent examination of financial information of any…

Q: What documentation should an auditor inspect when a client has paid off a bank note? How could an…

A: Definition: Bank statement: This is a periodic or monthly statement issued by the bank reporting the…

Q: An auditor issued an unqualified opinion on financial statements that failed to disclose that a…

A: Auditing refers to evaluating the books of accounts to determine the misstatement if any or to check…

Q: What tyype of opinion is issued by the auditor if he or she is unable to determine the overall…

A: Introduction: In an audit report, an auditor's opinion is conveyed. An initial portion of the audit…

Q: The auditor was aware that the goal of her audit was to provide reasonable confidence on financial…

A: This question deals with Either regular or egregious carelessness.

Q: The financial records of the Movitz Company show that R. Dennis owes $4,100 on an account…

A:

Q: As auditor you noticed that a long-term note payable of your client has no stated rate of interest ,…

A: Notes payable is a ledger created for recording the promissory notes issued at their face values.…

Q: The auditor must mail cash confirmations, but the client may mail long-term debt confirmations. True…

A: Confirmation Letter: It is a letter sent by an external  auditor to the suppliers/financial…

Q: While conducting an audit, Larson Associates, CPAs, failed to detect material misstatements included…

A: Section 11 of the Securities Act applies only to the initial public offerings and not to any second…

Audit Procedures

Audit Procedures are methods and techniques performed by the auditor to determine the quality of financial information of clients, thereby expressing an opinion on true & fair view of financial statements and entity position. They are identified and applied at the planning stage of audit after determining audit objectives, scope, approach, and risk assessment.