Auditing: A Risk Based-Approach to Conducting a Quality Audit
10th Edition
ISBN: 9781305080577
Author: Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher: South-Western College Pub
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Question
Chapter 4, Problem 32RSCQ
To determine
Legal Tests
Legal tests are various types of test which are commonly applied the method of evaluation used to resolve the matter of jurisprudence.
To explain: The tests used by courts to determine third party users who can file suit against an auditor for negligence and describe the parties that are defined in these tests.
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For what type of actions can clients bring suit against auditors under common law? What must clientsprove prior to bringing suit in each case?
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Chapter 4 Solutions
Auditing: A Risk Based-Approach to Conducting a Quality Audit
Ch. 4 - Prob. 1TFQCh. 4 - Prob. 2TFQCh. 4 - Prob. 3TFQCh. 4 - Prob. 4TFQCh. 4 - Prob. 5TFQCh. 4 - Prob. 6TFQCh. 4 - Prob. 7TFQCh. 4 - Prob. 8TFQCh. 4 - Utilitarian theory holds that what is ethical is...Ch. 4 - Prob. 10TFQ
Ch. 4 - Prob. 11TFQCh. 4 - Prob. 12TFQCh. 4 - Prob. 13MCQCh. 4 - Prob. 14MCQCh. 4 - Prob. 15MCQCh. 4 - Prob. 16MCQCh. 4 - Prob. 17MCQCh. 4 - Prob. 18MCQCh. 4 - Prob. 19MCQCh. 4 - Prob. 20MCQCh. 4 - Prob. 21MCQCh. 4 - Prob. 22MCQCh. 4 - Prob. 23MCQCh. 4 - Prob. 24MCQCh. 4 - Prob. 25RSCQCh. 4 - Prob. 26RSCQCh. 4 - Prob. 27RSCQCh. 4 - Prob. 28RSCQCh. 4 - Prob. 29RSCQCh. 4 - Prob. 30RSCQCh. 4 - Refer to the Focus on Fraud feature “Moss Adams...Ch. 4 - Prob. 32RSCQCh. 4 - Prob. 33RSCQCh. 4 - Prob. 34RSCQCh. 4 - Prob. 35RSCQCh. 4 - Prob. 36RSCQCh. 4 - Prob. 37RSCQCh. 4 - Prob. 38RSCQCh. 4 - Prob. 39RSCQCh. 4 - Prob. 40RSCQCh. 4 - Prob. 41RSCQCh. 4 - Prob. 42RSCQCh. 4 - Prob. 43RSCQCh. 4 - Prob. 44RSCQCh. 4 - Prob. 45RSCQCh. 4 - Prob. 46RSCQCh. 4 - Prob. 47RSCQCh. 4 - Prob. 48RSCQCh. 4 - Prob. 49RSCQCh. 4 - Prob. 50RSCQCh. 4 - Prob. 51RSCQCh. 4 - Refer to Exhibit 4.4. Briefly explain the seven...Ch. 4 - Prob. 53RSCQCh. 4 - Prob. 54RSCQCh. 4 - Prob. 55RSCQCh. 4 - Prob. 56RSCQCh. 4 - Prob. 57RSCQCh. 4 - Prob. 58RSCQCh. 4 - Prob. 59RSCQCh. 4 - Prob. 60RSCQCh. 4 - Prob. 61RSCQCh. 4 - Prob. 62RSCQCh. 4 - Prob. 63RSCQCh. 4 - Prob. 64RSCQCh. 4 - KPMG (LO 1, 2, 3) KPMG LLP served as the external...Ch. 4 - Prob. 66FF
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Similar questions
- Auditors may be held liable to both their clients and third parties under common law. a. What must a client prove to recover its losses from the auditors under common law? b. In a court that adheres to the precedent set by the Ultramares v. Touche case, what must an ordinary third party prove to recover losses from the auditors under common lawarrow_forwardWhat are the concepts of legal responsibility applicable to the accountant in his audit functions and other related services? and mention five (5) recommendations so that the auditor can prevent or protect himself from his legal responsibility.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
- Which of the following cases provides auditors the broadest exposure for liability to thirdparties for ordinary negligence under common law?a. Credit Alliance v. Arthur Andersen.b. Fleet National Bank v. Gloucester Co.c. Rosenblum Inc. v. Adler.d. Ultramares.arrow_forwardHow does the auditor’s opinion differ between scope limitationscaused by client restrictions and limitations resulting from conditions beyond the client’scontrol? Under which of these two will the auditor be most likely to issue a disclaimer ofopinion? Explain.arrow_forwardGenerally, the auditor could be legally liable under? Select one: a. contract law but not under the tort of negligence to third parties b. the tort of negligence to the client and contract law c. the tort of negligence but not contract law to the client d. contract law to third parties and to the clientarrow_forward
- Briefly comment on the following questions or statements. a) Describe approaches to minimizing legal liability. b) Describe concept of 'duty of care'. c) Describe concept 'contributory negligence'arrow_forwardWhich common law approach leads to increased CPA liability to "foreseeable" third parties for ordinary negligence?arrow_forwardWhat is the auditors responsibility regarding the noncompliance with laws by a client?arrow_forward
- Each of the following situations involves possible violations ofthe AICPA Code of Professional Conduct. For each situation, state whether it is a violationof the Code. In those cases in which it is a violation, explain the nature of the violationand the rationale for the existing rule.a. The audit firm of Miller and Yancy, CPAs, has joined an association of other CPAfirms across the country to enhance the types of professional services the firm canprovide. Miller and Yancy share resources with other firms in the association,including audit methodologies, audit manuals, and common IT systems for billingand time reporting. One of the partners in Miller and Yancy has a direct financialinterest in the audit client of another firm in the association.b. Bruce Sullivan, CPA, is the audit partner on the engagement of Xylium Corporation,which is a public company. In structuring the agreement with the audit committeefor the audit of Xylium’s financial statements, Sullivan included a clause that…arrow_forwardDiscuss a portion of a law, such as the Sarbanes-Oxley Act of 2002, under which auditors have obligations. As part of the analysis, illustrate how the auditor should communicate known violations of the law. The analysis should include at least 3 real- world examples.arrow_forward31) outline and discuss the six major phases of litigation and indicate the phases where the forensic accountant would do most of his or her work.arrow_forward
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