Chapter 20‚ Review Question 20-5 Distinguish among the four standards that have evolved for defining auditors’ liability for ordinary negligence to third parties under common law. Why is this area of auditors’ liability so complex? Legal precedent differs by jurisdiction (state by state). Third party must prove: 1. auditor had a duty to the plaintiff to exercise due care 2. auditor breached that duty by failing to act with due professional care 3. direct causal connection between auditor’s
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Accounting Theory Assignment #2 To: Mr. Oye Williams By: Fatima E. Manyeh 07436 March 6‚ 2014 1) BDO Seidman’s attorney pointed out correctly that professional standards do not prohibit auditors and client personnel from being ‘friends’. At what point does such relationship result in violation of the auditor independence rules and guidelines? Provide hypothetical examples to strengthen your answers. Health Management‚ Inc. was a pharmaceutical sales company who faced many problems after their
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Guidance: AU § 150.02: This is the standard on independence in mental attitude in all matters relating to the audit. The auditor needs to be aware of any personal factors that could impair his independence and objectivity. AICPA Code of Professional Conduct ET Section 101.02 Rule 101- 1 Independence: This section outlines specific relationships that impair auditor independence. There is a provision for other considerations that defines the reasonable person test for determining if there
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Auditing Case study Answers to case study: 1. What are the auditor ’s primary objectives when he or she observes the client ’s annual physical inventory? Ans. The Primary Objective of auditor is to make sure the inventory reflected on the balance sheet actually exists and that the balance sheet includes all inventory owned by the company .This includes all raw material‚supplies‚inventory in transit.The company may have on consignment with another business and inventory stored off the
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Comply with Generally Accepted Auditing Standards | The auditor must have adequate technical training and proficiency to perform the audit. | Jones‚ CPA hired to students that did not have any experience. | The auditor must maintain independence in mental attitude in all matters relating to the audit. | Arthur Jones‚ CPA‚ accepted the offer of receiving a bonus if bank approves the loan. | The auditor must exercise due professional care in the performance of the
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controversy over the role of the auditor with respect to the detection of fraud. There are different perceptions to the auditor’s duty regarding fraud. In today’s technological age‚ fraud has become very complicated‚ and increasingly difficult to detect‚ especially when it is collusive in nature and committed by top management who are capable of concealing it. Consequently‚ auditors have argued that the detection of fraud should not be their responsibility rather the auditor sees his duty as the independent
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APL‚ Sun Guard  EDUCATION AND TRAINING â Fixed Income/Equity Support â Reconciliations â Manage /Track Trade Settlements â Foster Strong Business/Client Relations â Trade lifecycle processing â Data Validation / Reporting â External Audit â Quickly Resolve Trade/Account Issues Professional Experience December 2010 to Present: Citigroup â Global Transaction Services New York‚ NY Assistant Vice President â Supervise 3-5
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someone uses information or facts that go along with their original thought‚ to “confirm” that they are right. This tendency could result in a lack of audit effectiveness because an auditor may only try to use evidence to support what they think the answer is‚ and not look for evidence that would go against their case. The auditor might be
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cooperates with the auditor in making all necessary disclosures and situations involving uncooperative clients. Briefly summarize the differing responsibilities that auditors have in those two sets of circumstances. Answer: International Standard of Auditing (ISA) Section 560 Subsequent Events paragraph 15 defined that “Subsequent discovery of facts existing at the date of the auditor’s report” is where the condition when after the financial statements have been issued‚ the auditor becomes aware of
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accounting report integrity‚ and the cost of debt. Journal of Accounting and Economics 37 (3): 315-342. Ashbaugh‚ H.‚ R. LaFond‚ and B. W. Mayhew. 2003. Do nonaudit services compromise auditor independence? Further evidence. The Accounting Review 78 (3): 611-639. Balsam‚ S.‚ J. Krishnan‚ and J. S. Yang. 2003. Auditor industry specialization and earnings quality. Auditing: A Journal of Practice & Theory 22 (2): 71-97. Barton‚ J.‚ and P. J. Simko. 2002. The balance sheet as an earnings management
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