tailieunhanh - Lecture Auditing & assurance services (5th) - Module C: Legal liability

The learning objectives for this chapter include: Identify and describe auditors' exposure to lawsuits and loss judgments, specify the characteristics of auditors' liability under common law and cite specific case precedents, describe auditors' liability to third parties under statutory law. | McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Module C Legal Liability “When men are pure, laws are useless; when men are corrupt, laws are broken.” Benjamin Disreali, Former British Prime Minister Mod C- Common Law Breach of contract: Services not performed by auditors in manner described in contract Tort liability: Obligation based on failure of auditors to exercise appropriate level of professional care Ordinary negligence is lack of reasonable care Gross negligence is lack of minimal care (similar to constructive fraud) Fraud is a misrepresentation of fact an individual knows to be false Mod C- Common Law Liability: Clients Sources of Liability Breach of contract Tort liability (ON, GN, F) Clients must show Economic loss Auditors breached contract or failed to exercise appropriate care The loss was caused by the breach of contract or failure of auditors to exercise the appropriate level of care Defenses Auditors did not breach contract or performed with appropriate level of care Causation (something else caused client loss) Contributory negligence (clients were partially responsible for loss) Mod C- Common Law Liability: Third Parties Generally liable to all third parties for gross negligence and fraud Liability for ordinary negligence Ultramares: No liability for ordinary negligence Credit Alliance v. Arthur Andersen: Liable to primary beneficiaries for ordinary negligence Fleet National Bank (restatement of torts): Liable to foreseen third parties for ordinary negligence Rosenblum v. Adler: Liable to foreseeable third parties for ordinary negligence Mod C- Proof and Defenses: Third Parties Third parties must show Economic loss Auditors failed to exercise appropriate level of care F/S contained a material misstatement Loss caused by reliance on misstated F/S Defenses Lack of appropriate standing (relationship with auditor) to bring suit Third party’s loss caused by factors other than the F/S and . | McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Module C Legal Liability “When men are pure, laws are useless; when men are corrupt, laws are broken.” Benjamin Disreali, Former British Prime Minister Mod C- Common Law Breach of contract: Services not performed by auditors in manner described in contract Tort liability: Obligation based on failure of auditors to exercise appropriate level of professional care Ordinary negligence is lack of reasonable care Gross negligence is lack of minimal care (similar to constructive fraud) Fraud is a misrepresentation of fact an individual knows to be false Mod C- Common Law Liability: Clients Sources of Liability Breach of contract Tort liability (ON, GN, F) Clients must show Economic loss Auditors breached contract or failed to exercise appropriate care The loss was caused by the breach of contract or failure of auditors to exercise the appropriate level of care Defenses Auditors did not breach .

• Kế toán - Kiểm toán
• Legal liability
• Auditor liability
• Auditing services
• Assurance services
• Contemporary auditing environment
• Financial statement audit
• Dynamic business law
• Business law
• Legal environment of business
• Business organizations
• Product liability
• Product liability theories
• Principles of auditing
• Legal liability of auditors
• CPA liability
• Criminal liability
• Securities laws
• Auditing and assurance services
• Auditing environment
• Sampling risk
• Nonsampling risk
• Financial statement auditing
• Auditing business processes
• Auditing internal control
• Ebook Business law and the legal environment
• Legal environment
• Employment law
• Government regulation
• Secured transactions
• Liability for negotiable instruments
• Lecture Dynamic business law
• Signature liability
• Parties signing negotiable instrument
• Liability of accountants
• Federal securities law
• Accommodation party
• Liability to third parties
• Authority of agent
• Assurance services profession
• Audit process
• Liability to clients
• Equity based compensation
• Directors’ and officers’ liability insurance coverage
• Earnings management
• Equity based executive compensation
• Risk taking behavior