EBK AUDITING+ASSURANCE SERVICES
17th Edition
ISBN: 9780135171219
Author: ARENS
Publisher: PEARSON CO
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Question
Chapter 5, Problem 17DQP
To determine
Find out the most proper term for the statements given.
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Check out a sample textbook solutionStudents have asked these similar questions
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.
V2. If a lawyer refuses to furnish corroborating information regarding litigation, claims, and assessments. the auditor should:
disclose this fact in a footnote to the financial statements.
seek to obtain the corroborating information from management.
C) consider the refusal to be a scope limitation.
D) honor the confidentiality of the client-lawyer relationship.
What elements does a plaintiff have to prove to be successful in a case against a
negligent auditor?
Chapter 5 Solutions
EBK AUDITING+ASSURANCE SERVICES
Ch. 5 - Prob. 1RQCh. 5 - Prob. 2RQCh. 5 - Prob. 3RQCh. 5 - Prob. 4RQCh. 5 - Prob. 5RQCh. 5 - Prob. 6RQCh. 5 - Prob. 7RQCh. 5 - Prob. 8RQCh. 5 - Prob. 9RQCh. 5 - Prob. 10RQ
Ch. 5 - What potential sanctions does the SEC have against...Ch. 5 - Prob. 12RQCh. 5 - Prob. 13RQCh. 5 - Prob. 14.1MCQCh. 5 - Prob. 14.2MCQCh. 5 - Prob. 14.3MCQCh. 5 - Prob. 15.1MCQCh. 5 - Prob. 15.2MCQCh. 5 - Prob. 15.3MCQCh. 5 - Prob. 16.1MCQCh. 5 - Prob. 16.2MCQCh. 5 - Prob. 16.3MCQCh. 5 - Prob. 17DQPCh. 5 - Prob. 18DQPCh. 5 - Prob. 19DQPCh. 5 - Prob. 20DQPCh. 5 - Prob. 21DQPCh. 5 - Prob. 22DQPCh. 5 - Prob. 23DQPCh. 5 - Prob. 24DQPCh. 5 - Prob. 27DQPCh. 5 - Prob. 28C
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Similar questions
- Auditor’s failure to exercise sufficient care and skill in carrying out their audit might lead to legal action by those who claim to rely on the work of the auditor (Che-Ahmad et. Al., 2018). Discuss THREE (3) safeguards by auditors that could help minimize the risk of legal liability.arrow_forwardDescribe some civil and criminal consequences if CPAS/auditors fail to follow professional standards. I Summarize some things that CPAS can do to limit their liability and prevent lawsuits. Determine whether the liability risk to CPAS/auditors is appropriate, too high, or too low.arrow_forwardIndividuals who believe they relied on misstated financial statements to make a decision andhave suffered losses as a result will issue an action known as aa. Breach of contract.b. Tort.c. Securities litigation.d. Constructive fraud.arrow_forward
- The attorney's refusal to reply to the audit inquiry is a scope limitation that may affect the audit report. True Falsearrow_forwardWhat types of actions may an auditor be liable to a client under common law? Why would the clients prefer to sue the auditor for tort action rather than a breach of contract?arrow_forwardAuditor’s failure to exercise sufficient care and skill in carrying out their audit might lead to legal action by those who claim to rely on the work of the auditor (Che-Ahmad et. Al., 2018). REQUIRED: Discuss THREE (3) safeguards by auditors that could help minimize the risk of legal liability.arrow_forward
- 2. A client has departed from GAAP for what you, the auditor, considers to be justifiable. The financial statements would have been misleading if the client had not departed from GAAP. Circumstance: Type of Opinion:arrow_forwardIn a common law action against an accountant, lack of privity is a viable defense ifthe plaintiff(1) is the client’s creditor who sues the accountant for negligence.(2) can prove the presence of gross negligence that amounts to a reckless disregardfor the truth.(3) is the accountant’s client.(4) bases the action upon fraud.arrow_forwardWhat kind of actions might customers pursue against auditors under the common law doctrine of restitution? In each situation, what evidence do clients need to provide before filing a lawsuit?arrow_forward
- What does a third-party user of financial statements have to prove under common law in a suit against an auditor for the auditor's negligence? Explain each item with an examplearrow_forwardAn investor or creditor believes that they have suffered harm due to the unexpected the bankruptcy of a large corporation: Required: Can that investor or creditor sue the auditor of the large corporation under contract law? Explain. If the investor or creditor chooses to sue the auditor of the large corporation under tort law, what must they prove before their claim can succeed? How can the auditor contest a claim of negligence?arrow_forwardAn attorney may impeach an opposing party’s witness by showing/proving that the witness: A. Has been convicted of a misdemeanor. B. Made prior consistent statements. C. Has a reputation for truthfulness. D. Is influence by bias or self-interest.arrow_forward
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