Lauren Yost Case
Chance Peterson
January 31 2015
ACC 411 W.A. 2
Chapter 5
18.
a. What defense should Lauren Yost and Co. use in the suit by Stuart?
Contributory negligence appears to be the best defense against Stuart. The president personally verified the procedure of counting inventory on different days at different locations and thus signed off on the method. This could’ve hide the overstatement of inventory from the auditor. Also, Yost had no influence over this internal control weakness.
b. What defense should Lauren Yost and Co. use in the suit by First City National Bank? Using the no negligence performance as defense would be the ideal option for Yost. The overstated inventory was not discovered therefore not Yost’s fault and she conducted the audit in accordance with auditing standards. Also, she’s not responsible for the misstated information under this …show more content…
Is Yost likely to be successful in her defenses? Yost can win her case with these defenses as long as she can prove the inventory was overstated by the company. For her to require the president to sign off on the debated method of counting inventory as it can possibly be used as evidence. Yost was not the only one counting inventory, there was one other person in the CPA firm at each site to an audit procedure.
d. Would the issues or outcome be significantly different if the suit was brought under the Securities Exchange Act of 1934? There’s no issue under with Yost under 1934 act. The issues and outcomes should be essentially the same under the suit brought under the Securities Exchange Act of 1934. If the suit were brought under Rule 10b-5, it is certainly unlikely that the plaintiff (Yost) would be successful, in as much as there was no intent to deceive. The plaintiff would likely be unsuccessful in such a suit.
19. Will the CPA firm be liable to the creditors who extended the money because of their reliance on the erroneous financial statements if Newell Corporation should fail to pay
January 31 2015
ACC 411 W.A. 2
Chapter 5
18.
a. What defense should Lauren Yost and Co. use in the suit by Stuart?
Contributory negligence appears to be the best defense against Stuart. The president personally verified the procedure of counting inventory on different days at different locations and thus signed off on the method. This could’ve hide the overstatement of inventory from the auditor. Also, Yost had no influence over this internal control weakness.
b. What defense should Lauren Yost and Co. use in the suit by First City National Bank? Using the no negligence performance as defense would be the ideal option for Yost. The overstated inventory was not discovered therefore not Yost’s fault and she conducted the audit in accordance with auditing standards. Also, she’s not responsible for the misstated information under this …show more content…
Is Yost likely to be successful in her defenses? Yost can win her case with these defenses as long as she can prove the inventory was overstated by the company. For her to require the president to sign off on the debated method of counting inventory as it can possibly be used as evidence. Yost was not the only one counting inventory, there was one other person in the CPA firm at each site to an audit procedure.
d. Would the issues or outcome be significantly different if the suit was brought under the Securities Exchange Act of 1934? There’s no issue under with Yost under 1934 act. The issues and outcomes should be essentially the same under the suit brought under the Securities Exchange Act of 1934. If the suit were brought under Rule 10b-5, it is certainly unlikely that the plaintiff (Yost) would be successful, in as much as there was no intent to deceive. The plaintiff would likely be unsuccessful in such a suit.
19. Will the CPA firm be liable to the creditors who extended the money because of their reliance on the erroneous financial statements if Newell Corporation should fail to pay