“History shows that human-made disasters have consistently been caused‚ not by individuals‚ but by errors‚ misjudgments‚ failures or even negligence by senior management because they have failed to instill a culture of safety within an organization.” Critically discuss this statement‚ giving examples where appropriate. This essay question revolves around the one of the most pressing questions asked by media organizations at the scene or onset of a disaster‚ ‘what/who caused it?’ Was the disaster
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free of material misstatements‚ that alone would give me a reason to sue the auditors. B) Negligence as it is used in legal cases involving independence auditor is defined as “failure to conduct an audit with due professional care in the performance of work” C) The primary difference between negligence and fraud is fraud is the intentional concealment or misstatement of information with intent‚ while negligence is the lack of attention to detail‚ that results in material misstatement. Recklessness
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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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defendant regardless of the defendant’s level of culpability. True False 4. Strict privity is the relationship of parties who enter into a contract together. True False 5. The restatement of torts extends liability for ordinary negligence to "foreseen" third parties who may not be explicitly known to auditors. True False 6. The Private Securities Litigation Reform Act deals with lawsuits in both federal and state courts. True False 7. Legal liabilities of
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Most of the burden of affirmative proof is on the defendant under common law. Answer: False Difficulty: Medium 3. The Ultramares v. Touche case held that auditors could be held liable to any foreseen third party for ordinary negligence. Answer: False Difficulty: Medium 4. The Securities Exchange Act of 1934 offers recourse against the auditors to a far greater number of investors than does the Securities Act of 1933. Answer: True Difficulty: Medium
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unless they wanted to reduce their current taxes. 4) In the engagement letter given to a client it says that “the auditor is able to obtain reasonable‚ but not absolute‚ assurance that material misstatements are detected.1” This means the auditor is not responsible for ensuring there is not mistakes or misstatement but they are responsible for reasonable assurance. The judgment of the auditor is “required to be the informed judgment of a qualified professional person2” In other words the auditors at Chapman
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Chapter 4 Legal Liability for auditors 4-1. Understand litigious environment‚ which CPAs practice According to Google dictionary‚ litigious environment means a controversial environment. Where a simple mishaps can end up in a heavy lawsuit. Under common law‚ audit professionals have the responsibility to their client to fulfill their agreed on contracts. However‚ if one audit fails to fulfill their contract‚ not only they have to take responsibility to their clients but in some circumstances
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ISSUES Parties: Frank and Belinda; Marie; Douglas Pty Ltd; Black; Brown & Co Issue 1: Does any of those parties mentioned above have a duty of care to Frank and Belinda? If so‚ are they liable for a negligent misstatement for the loss of Frank and Belinda? Sub Issue 1.1: Does Marie have a duty of care to Frank and Belinda? Sub Issue 1.2: Does Douglas Pty Ltd have a duty of care to Frank and Belinda? Sub Issue 1.3: Does Black have a duty of care to Frank and Belinda? Sub Issue 1.4: Does Brown
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opinion to the Shareholders Management gives a stewardship relationship (to manage and look after the company for the S/H) with the shareholders Audit Objectives To gain reasonable assurance of F/S To ensure F/S are free from material misstatements For the auditor to express an opinion about the F/S being prepared with respects to the financial reporting frameworks (IFRS‚ ASPE) Chapter 2 – The Public Accounting Profession Quality Control for Firms (Table 2.2. p 39)
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Q1 Advise Brad as to his rights against the University of Kew Brad could sue the University of Kew in negligence‚ contract and misleading.少写了consumer contract Action against University of Kew in negligence Pure economic loss In this case‚ Brad suffered pure economic loss. Brad completed the course but finally did not become either a CPA or CA on the basis of his Doctor of Accountancy course. Besides‚ he could have earned $300‚000 a year as a management consultant. What is worse‚ he went to
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