Chapter 14, Problem 5RQSC

Describe the action that an auditor should take if an attorney refuses to give information that is within the attorney's authority and may have a direct impact on the financial statements' fair presentation.

What is an auditor’s primary method to corroborate information on litigation, claims, andassessments?a. Examining legal invoices sent by the client’s attorney.b. Verifying attorney–client privilege through interviews.c. Reviewing the response from the client’s lawyer to a letter of audit inquiry.d. Reviewing the written representation letter obtained from management.

What are some civil and criminal consequences if CPAs/auditors fail to follow professional standards?

What is meant by a “colorable claim”? Do you believe auditors should be liable for investor losses even if they follow generally accepted auditing standards?

If an auditor believes that an understanding with an audit client has not been established he or she should? State what should an auditor do and explain.

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.

What steps do you believe auditors should take if the client is not pleased with the type of audit report issued by the auditors, based on the evidence they collected?

Give an explanation of the legal foundation for suing a CPA. What defenses does the auditor have to counter such accusations? What is the relationship between these defenses and adherence to the accounting profession's ethical standards?

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 example