Auditing and Assurance Services (16th Edition)
16th Edition
ISBN: 9780134065823
Author: Alvin A. Arens, Randal J. Elder, Mark S. Beasley, Chris E. Hogan
Publisher: PEARSON
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Chapter 5, Problem 18DQP
To determine
Find out the most proper term for the statements given.
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Students have asked these 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 law
What elements does a plaintiff have to prove to be successful in a case against a
negligent auditor?
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).
REQUIRED:
Discuss THREE (3) safeguards by auditors that could help minimize the risk of legal liability.
Chapter 5 Solutions
Auditing and Assurance Services (16th Edition)
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 - Under Section 11 of the Securities Act of 1933 and...Ch. 5 - Prob. 25DQPCh. 5 - Prob. 26DQPCh. 5 - Prob. 27C
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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.arrow_forwardThe attorney's refusal to reply to the audit inquiry is a scope limitation that may affect the audit report. True Falsearrow_forward2. 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_forward
- 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.arrow_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_forwardWhat 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_forward
- Audit evidence obtained directly by the auditor will not be reliable if Select one: a. it is provided by the client's attorney b. the auditor lacks the competence to evaluate the evidence c. it is impossible for the auditor to obtain additional corroboratory evidence d. the client denies its veracityarrow_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 refusal of a client’s attorney to provide the information requested in an inquiry letter is considered A. Reasons for adverse opinion B. A limitation on the scope of the audit C. Grounds to withdraw from the engagement D. Equal to a significant deficiencyarrow_forwardIs the auditor’s liability affected if the third party was unknownrather than known? Explainarrow_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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