Describe the requirements for the director’s liability under s136
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‘Section 136 is not based on directors taking risks. It is based on the performance of specific obligations and the associated beliefs of the directors’
Describe the requirements for the director’s liability under s136
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- 80 For which of the following matters should an auditor obtain written management representations? Group of answer choices Management’s compliance with contractual agreements that may affect the financial statements. Management’s knowledge of future plans that may affect the price of the entity’s stock. Management’s cost-benefit justifications for not correcting internal control weaknesses. Management’s acknowledgment of its responsibility for employee’s violations of laws.Which of the forgoing "year-end" actions are clearly in conflict with the IMA statement of ethical standards and should be viewed as unacceptable because of their potential harm to investors?Do you believe that the SEC should prohibit auditors from providing all nonaudit services for audit clients? Use ethical reasoning to support your answer.
- According to the AICPA Code of Professional Conduct, omitting material information on a financial disclosure is just as unethical as actively misleading investors with false information on a financial disclosure. Select one: True False47-Which of the following are not the rights of the auditors? a) The right to all information and explanations (from management) necessary for the proper conduct of the audit. b) The right to receive notice of all meetings of the directors and to attend those meetings. c) The right to speak at shareholders’ meetings on matters affecting the Management. d) The right to visit the branches of the client and right to access all accounting books and records. e) The right to examine and evaluate financial and information systems, recommending controls to ensure system reliability and data integrity f) The right to review data about material assets, net worth, liabilities, capital stock, surplus, income and expenditures Only d) , e) and f) All a) , b) , c) , d) and e) Only e) and f) None of the options givenWhich of the following statements regarding auditors’ liability under the Securities Act of1933 is not true?a. The act relates to the initial issuance of securities to the public, normally through an initial public offering.b. Auditors’ liability arises because of audited financial information filed with the SEC.c. Third parties must demonstrate that they relied on misstated financial statements thatwere examined by auditors.d. Auditors may be liable if they are found to have engaged in ordinary negligence.
- Which of the following is considered a type of threat to compliance with the Rules of the Code of Professional Conduct? A. Self interest B. Illegitimate skepticism C. Lack of management participation D. IrrevocabilityIf either party fails to perform their contractual obligations according to the contract terms, it will usually result in a breach of contract. The scope and nature of an auditor's contractual obligation to a client ordinarily is established in the: Select one: a. Corporations Act 2001. b. Management letter. c. Client’s constitution. d. Engagement letter.Which of the following is a major difference in auditors’ liability under the Securities Act of1933 and the Securities Exchange Act of 1934?a. The burden of proving reliance on misstated financial statements and the relationshipbetween these financial statements and the economic loss.b. The auditors’ required degree of professional care.c. Both of the above.d. Neither of the above
- Which of the following is NOT an auditor's responsibility? Obligation to report any breach of the law Obligation to report to members Obligation to report to the bankers of the corporation Signing the audit report is a requirement.A number of cases have considered the auditor’s liability in relation to persons other than the immediate client. Even so, the AWA case established that: Select one: a. Duty of care and skill means following the accounting standards b.auditors have a contractual duty to oversee and review the work of inexperienced audit staff c.Auditors are only liable for the proportion of damages attributable to their actions d.Auditors have a duty of care only to the shareholders.25. Which of the following are not the rights of the auditors? a) The right to all information and explanations (from management) necessary for the proper conduct of the audit. b) The right to receive notice of all meetings of the directors and to attend those meetings. c) The right to speak at shareholders’ meetings on matters affecting the Management. d) The right to visit the branches of the client and right to access all accounting books and records. e) The right to examine and evaluate financial and information systems, recommending controls to ensure system reliability and data integrity f) The right to review data about material assets, net worth, liabilities, capital stock, surplus, income and expenditures a. Only d) , e) and f) b. All a) , b) , c) , d) and e) c. Only e) and f) d. None of the options given
