Is Emily's report in accordance with professional standards? If not, what should she have done under the circumstances? Explain
Q: Which of the following would be considered a self-interest threat? When a member of the assurance…
A: Self-interest threat: Self-interest threat refers to a situation in which a member will act in a way…
Q: What are the section in the Code of Ethics for Professional Accoountants that has Prohibitions?
A: Prohibitions are stated in the following section
Q: Why is continuing education required to maintain certification?
A: Auditing is the process by which assertions made by management about financial transactions of a…
Q: a. What is the relationship between a. the ethical obligation of honesty and truth telling?b. Is it…
A:
Q: Direct evidence consists of a supervisor's opinion as to the plaintiff's mental state at the time of…
A: The answer is provided as follows:
Q: What is the auditor's role when a client fails to follow the law?
A: This question explains about the auditor's role on a client fails to follow the law.
Q: why should the client represantion letter be prepared foreach examination?
A: SOLUTION REPRESENTATION LETTER IS A LETTER WRITTEN FROM THE ASSOCIATION TO ITS ACCOUNTANT…
Q: Who can sue the auditor? how they can sue the auditor. Explain.
A: An auditor is a person or an entity (if the auditor is a firm), who is authorized and assigned/hired…
Q: countant encounter when trying to decide on “full disclo
A: Accountant role is quite complicated and he has to honest and committed to principal of accounting.
Q: Which of the following is prohibited by the AICPA Code of Professional Conduct?
A: T o help respond effectively to new ethical challenges they face in serving…
Q: ia partner does not keep dn daəy ou səop equired training per her professional obligations, is she…
A: KMPG Partner refers to the partner who is at a senior designation with a consulting or financial…
Q: Which of the following would be considered a self-interest threat? When a member of the assurance…
A: Auditor's independence is the most crucial aspect of the whole auditing process and can be…
Q: t an audito
A: The temptation to interpret data in a way that supports assumptions might seduce an audit and derail…
Q: Comment on the actions of David Duncan and Nancy Temple. Which of these parties do you believe was…
A:
Q: A CPA's duty of due care to a client most likely be breached when a CPA
A: Professional competence & due care means to maintain Secrecy & have knowledge about the…
Q: As a student, do you feel the effects of train law? If yes , how does it affects you? If no, why do…
A: Train law is briefly known as Tax Reform for Acceleration and Inclusion law. It is signed into law…
Q: What are the key features of the objection and appeal process against the Commissioner’s decision?
A: If a taxpayer does not agree with the decision and wishes to take it further, then they may lodge a…
Q: Stare decisis is a doctrine obligating judges to help persons who have failed to protect their own…
A: The belief of Stare Decisis. Stare decisis, that is Latin for "to stand by things set,"23 may be a…
Q: An act of treating employees unfairly based on their gender, age, race, etc is called?- a.…
A: discrimination is treating employees unfair and biased based on age, religion, sex etc.
Q: Just because a person has a right to blow the whistle, does that mean she has a duty to blow the…
A: The Rights perspective establishes the ethical duties for the rights of one or more parties. The…
Q: r spouse has just accepted a new job as an Accountant at an SEC restricted audit client. Which…
A: An accountant is a professional who performs accounting duties such as account analysis, auditing,…
Q: Which of the following about materiality is NOT true? A. Information is material if, in determining…
A: materiality is a concepts that applies in a variety of context including accounting, reporting,…
Q: Does the organization conduct pre-employment backgroundchecks to identify previous dishonest or…
A: Background check : It is the process which helps in finding the employee who has the right integrity…
Q: Prior to that incident, what action should have been taken for James? What was going to happen to…
A: Drivers who strike pedestrian can face criminal and civil consequences, Depending on the…
Q: What is due care? To what standards are auditors held with respect to due care?
A: Due Care: The performance level which is required to be achieved by reasonable auditors in…
Q: What are the rights and duties of the CPA? What obligation does the CPA have to a user of the…
A: Duties of CPA: Auditing and maintaining the financial records of the company Creating and Analyzing…
Q: Is Buddy behaving ethically? Why or why not? Who is affected by Buddy’s decision? How should Buddy…
A: No buddy is not behaving ethically because the principles of accounting are not applied in…
Q: What are the consequences for a CPA who commits an Act Discreditable?
A: Discreditable: As per the code of conduct, a member will not perform an act discreditable i.e. an…
Q: Compared with other professions, what features in the ethics for accountant which is not true to,…
A: The professionals like auditors and public accountants have some responsibilities towards society,…
Q: Identify and discuss at least four ethical implications of those acts by Gilbert that were in…
A: Discussion of Ethical implications of those acts by Gilbert that were in violation are as follows
Q: Do you think that the provision of nonaudit services for a client with a failed audit is evidence of…
A: Negligence in auditing means the auditor doesn't follow any standard related to auditing and…
Q: How will you explain the different types of audit opinion (e.g., Unqualified, Qualified, Adverse,…
A: Audit opinion refers to the opinion given by the auditor of the entity on examination of the…
Q: What is meant by the evaluation of a client's ability to continue as a going concern? What are some…
A: Going concern concept states that the financial statements of an entity should be prepared on the…
Q: What is the difference between a CPA’s unqualified opinion or “clean” opinion and a qualified one?
A: US GAAP:US GAAP are financial reporting standards provided by FASB, which is a US based board that…
Q: What shall the internal auditor pay attention in reviewing the Executive Compensation Benefits and…
A: Internal Auditor:- An internal auditor is trained professional, who is employed by the firms in…
Q: Which of the following documentary evidence is considered ? the most reliable Select one a. Written…
A: Audit refers to the evaluation of companies financial statement by the auditor in order to check the…
Q: What is “Head of household” filing status? Who can claim it and who can’t? Is it helpful or not, and…
A: There are five filing statuses as mentioned under the Federal taxes:- 1. Single 2. Head of household…
Q: Why should you discuss the rights and responsibilities of all parties with a client?
A: A customer who enters into a service contract must furnish the provider with all information he…
Q: Why are auditors not liable for defamation in connection with his/her audit?
A: Defamation: In auditing, defamation shall mean expressing an inappropriate opinion on financial…
Q: Before taking a job as an auditor, what things should they keep in mind? Explain.
A: Introduction: A financial audit is a systematic examination and evaluation of an organization's…
Step by step
Solved in 2 steps
- Mark Williams, CPA, was engaged by Jackson Financial Development Company to audit the financial statements of Apex Construction Company, a small closely held corporation. Williams was told when he was engaged that Jackson Financial needed reliable financial statements that would be used to determine whether to purchase a substantial amount of Apex Construction’s convertible debentures at the price asked by the estate of one of Apex’s former directors. Williams performed his audit in a negligent manner. As a result of his negligence, he failed to discover substantial defalcations by Carl Brown, the Apex controller. Jackson Financial purchased the debentures, but it would not have done so if the defalcations had been discovered. After discovery of the fraud, Jackson Financial promptly sold them for the highest price offered in the market at a $70,000 loss. If Apex Construction also sues Williams for negligence, what are the probable legal defenses Williams’s attorney would raise?…Mark Williams, CPA, was engaged by Jackson Financial Development Company to audit the financial statements of Apex Construction Company, a small closely held corporation. Williams was told when he was engaged that Jackson Financial needed reliable financial statements that would be used to determine whether to purchase a substantial amount of Apex Construction’s convertible debentures at the price asked by the estate of one of Apex’s former directors. Williams performed his audit in a negligent manner. As a result of his negligence, he failed to discover substantial defalcations by Carl Brown, the Apex controller. Jackson Financial purchased the debentures, but it would not have done so if the defalcations had been discovered. After discovery of the fraud, Jackson Financial promptly sold them for the highest price offered in the market at a $70,000 loss. What liability does Williams have to Jackson Financial? ExplainMark Williams, CPA, was engaged by Jackson Financial Development Company to audit the financial statements of Apex Construction Company, a small closely held corporation. Williams was told when he was engaged that Jackson Financial needed reliable financial statements that would be used to determine whether to purchase a substantial amount of Apex Construction’s convertible debentures at the price asked by the estate of one of Apex’s former directors. Williams performed his audit in a negligent manner. As a result of his negligence, he failed to discover substantial defalcations by Carl Brown, the Apex controller. Jackson Financial purchased the debentures, but it would not have done so if the defalcations had been discovered. After discovery of the fraud, Jackson Financial promptly sold them for the highest price offered in the market at a $70,000 loss. Will the negligence of Mark Williams, CPA, prevent him from recovering on a liability insurance policy covering the practice of…
- Nixon & Co., CPAs, issued an unmodified opinion on the 2015 financial statements of Madison Corp. These financial statements were included in Madison’s annual report and Form 10-K filed with the SEC. Nixon did not detect material misstatements in the financial statements as a result of negligence in the performance of the audit. Based upon the financial statements, Harry Corp. purchased stock in Madison. Shortly thereafter, Madison became insolvent, causing the price of the stock to decline drastically. Harry has commenced legal action against Nixon for damages based upon Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934. What would be Nixon’s best defense to such an action? Explain.Harold, CPA, believes there is substantial doubt about the ability of Jersamtan Co. to continue as a going concern for a reasonable period of time. In evaluating Jersamtan's plans for dealing with the adverse effects of future conditions and events, Harold most likely would consider, as a mitigating factor, Jersamtan's plans to Discuss with lenders the terms of all debt and loan agreements. Postpone expenditures for research and development projects. Purchase production facilities currently being leased from a related party. Strengthen internal controls over cash disbursements.Holly Hill Acres, Ltd., executed and delivered a promissory note and a purchase money mortgage to Rogers and Blythe. The note provided that it was secured by a mortgage on certain real estate and that the terms of that mortgage “are by this reference made a part hereof.” Rogers and Blythe then assigned the note to Charter Bank, and the bank sought to foreclose on the note and mortgage. Holly Hill Acres refused to pay, claiming that the note was not negotiable and therefore subject to the defense that Holly Hill Acres had been defrauded by Rogers and Blythe. a. Present the position that the note is a negotiable instrument. b. What is the position that the note is nonnegotiable? c. Is the note negotiable or nonnegotiable? Explain.
- You are the lead partner overseeing the audit for Camo Ltd, a privately owned company. The completion of the audit report is pending for the income year 2020 and you have noted several situations with possible actions. The situations are as follows: 1. Camo Corporation carries its property, plant, and equipment accounts at current market values. Current market values exceed historical cost by a highly material amount, and the effects are pervasive throughout the financial statements. 2. Management of Camo Corporation refuses to allow you to observe, or make, any counts of inventory. The recorded book value of inventory is highly material. 3. You were unable to confirm accounts receivable with Camo’s customers. However, because of detailed sales and cash receipts records, you were able to perform reliable alternative audit procedures. 4. One week before the end of fieldwork, you discover that the audit manager on the Camo engagement owns a material amount of Camo’s common stock. 5.…You are the lead partner overseeing the audit for Camo Ltd, a privately owned company. The completion of the audit report is pending for the income year 2020 and you have noted several situations with possible actions. The situations are as follows: 1. Camo Corporation carries its property, plant, and equipment accounts at current market values. Current market values exceed historical cost by a highly material amount, and the effects are pervasive throughout the financial statements. 2. Management of Camo Corporation refuses to allow you to observe, or make, any counts of inventory. The recorded book value of inventory is highly material. 3. You were unable to confirm accounts receivable with Camo’s customers. However, because of detailed sales and cash receipts records, you were able to perform reliable alternative audit procedures. 4. One week before the end of fieldwork, you discover that the audit manager on the Camo engagement owns a material amount of Camo’s common stock. 5.…A group of investors sued Anderson, Olds, and Watershed, CPAs (AOW) for alleged damages suffered when the entity in which they held common stock went bankrupt. To avoidliability under the common law, AOW must demonstrate which of the following?a. The investors actually suffered a loss.b. The investors relied on the financial statements audited by AOW.c. The investors’ loss was a direct result of their reliance on the audited financial statements.d. The audit was conducted in accordance with generally accepted auditing standards andwith due professional care.
- Analyze each of the following situations below and provide your assessment of the potential resolution of each scenario, including potential liability for the auditor or audit firm involved. Yasmeen CPA is a defendant in a lawsuit alleging that she should be held liable for gross negligence for a fraud involving the valuation of securities included in the financial statements of one of his clients. Yasmeen was uncertain how to establish a correct valuation for the securities and decided to rely on the price estimation supplied by management. A lawsuit has been filed against Elena CPA, charging here with constructive fraud in the audit of Broughton Company’s financial statements. Elena has examined all the audit documentation in his files and reviewed all relevant auditing standards. She is convinced that his audit fully complies with standards of the profession but is uncertain what he should use as his primary defense tactic. Canon Film filed for a bankruptcy in January 2012. A…In comparison to the burden of proof required of plaintiffs in civil lawsuits against independent auditors under common law, section 10(b) of the Securities Exchange Act of 1934a. Is the same regarding plaintiffs’ need to prove damages or losses.b. Is the same regarding plaintiffs’ need to establish privity or a beneficiary relationshipwith auditors.c. Does not require that plaintiffs prove their reliance on materially misstated financialstatements.d. Does not require that plaintiffs prove that relying on the materially misstated financialstatements caused their losses.HolmesWatson (HW) is considering what the effect would be of reporting its liabilities under IFRS rather than U.S. GAAP. The following facts apply: a. HW is defending against a lawsuit and believes it is virtually certain to lose in court. If it loses the lawsuit, management estimates it will need to pay a range of damages that falls between $5,000,000 and $10,000,000, with each amount in that range equally likely. b. HW is defending against another lawsuit that is identical to item (a), but the relevant losses will only occur far into the future. The present values of the endpoints of the range are $3,000,000 and $8,000,000, with the timing of cash flow somewhat uncertain. HW considers these effects of the time value of money to be material. c. HW is defending against another lawsuit for which management believes HW has a slightly worse than 50/50 chance of losing in court. If it loses the lawsuit, management estimates HW will need to pay a range of damages that falls between…