Additional Cases for the Course The case readings have been developed solely as a basis for class discussion. The case readings are not intended to serve as a source of primary data or as an illustration of effective or ineffective auditing. Reprinted by permission from Jay C. Thibodeau and Deborah Freier. Copyright © Jay C. Thibodeau and Deborah Freier; all rights reserved. 1••• ( Case 61 ® Enron Enrori’s First Few Years hi~ 1985 Enron had assets along the three major stages of the supply
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Phar-Mor Case Study Phar-Mor Case 4.6 Questions 1. a) By hiring a member of its external audit team a company could gain insight into the auditor’s process and better devise methods of hiding fraud. b) Hiring a former auditor would greatly compromise and possibly impair the existing external auditor’s ability to remain independent. On top of having knowledge about the auditor’s practice‚ preexisting relationships could cause bias in the audit outcome. c) Sarbanes-Oxley Act 2002 limits the ability
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Based on - Auditing & Assurance Services: A Systematic Approach (7th edition) EXAM CHAPTERS: 1‚ 2‚ 7‚ 18‚ 19‚ 20 and 21 EXAM REQUIREMENTS: - Closed-book exam (no text‚ notes‚ etc.) - Limited to 90 minutes - Pencils and erasers (no calculator required) EXAM POINT DISTRIBUTION: Total Points 150 (50 Multiple-Choice questions) By Chapter: Chapter 1 = 15 points Chapter 2 = 21 points Chapter 7 = 6 points Chapters 18‚ 19‚ 20 and 21 = 27 points each EXAM STUDY APPROACH:
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Bibliography: Perre v Apand (1999) 198 CLR 180. Ultramares Corp v Touche‚ Niven & Co 174 NE 441 (1931). Textbook; Harvey‚ C and Mesiti‚ V (2009)
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They did not engage in actual or constructive fraud. (pg. 806) They had no information that would lead them to know that FAMCO was going to give the audit reports to Hutton‚ which Hutton used as a basis for purchasing loans from FAMCO. Under the Ultramares doctrine an accountant can
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Discussion 5 Week – 7 Case 7.5 Fred Stern /Ultramares When assessing audit risk‚ should auditors consider the type and number of third parties that may ultimately rely on the client’s financial statements? Should auditors insist that audit engagement letters identify the third parties to whom the client intends to distribute the audited financial statements? Would this practice eliminate auditors’ legal liability to nonprivity parties not mentioned in engagement letters? During an audit it
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TATIANA MOLODCHIKOVA S42724155 ACCT 7103 TOPIC 1 (THIRD PARTY LIABILITY) WORD COUNT 3000 The liability of auditors to third parties has been the subject of much litigation. Litigation claims against accountancy firms have increased dramatically in the last thirty years. Previously‚ such cases were rare and were viewed with great interest. Nowadays‚ whereas still treated with great interest they are becoming all kind
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2. A) A client can be put in a more powerful position than the auditor in an auditor-client relationship if the auditor is trying to sell the client additional services. B) According to SOX external auditors are prohibited from providing certain services to clients: book keeping or other things related to the accounting records or financial statements of the audit client‚ they are not allowed to design and implement financial information‚ appraisal or evaluation services‚ internal audit outsourcing
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through taxation‚ legistration‚ social welfare‚ or some other legal means. In contrast‚ the capitalist society is rewarded to the risk takers alone (the auditors in this case). Until the case of Ultramares Corp. v. Touche‚ auditors admitted no liability whatsoever to third parties. The judgment in Ultramares reaffirmed the principle that a fraudulent accountant‚ not a negligent one‚ would be liable to third parties misled by his or her statements. This case has had an impact on the work of auditors
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Duty of care is the legal obligation that reasonable care must be taken to avoid acts with a reasonably foreseeable outcome of injuring another person. The concept of ‘duty of care’ was first recognised in Donoghue v Stevenson [1932] AC 562 where it was established that a duty of care is created via proximity‚ or a relationship between the defendant and the plaintiff. This is known as the ‘neighbour principle’ ‚ which relies on combination of proximity and a reasonably foreseeable risk of harm
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