3.An important development in the area of breach of contract by an auditor is contributory negligence. Required: Define contributory negligence. Discuss the concept of contributory negligence as it applies to auditing using the example of the AWA case.

3.An important development in the area of breach of contract by an auditor is contributory negligence. Required: Define contributory negligence. Discuss the concept of contributory negligence as it applies to auditing using the example of the AWA case.

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter4: Professional Legal Liability

Section: Chapter Questions

Problem 8CYBK

See similar textbooks

Related questions

Q: 4) Explain if, and why an accountant will be held liable to: its client, to 3rd party intended…

A: An accountant owes it to their clients to use sound professional judgement. According to the Revised…

Q: Explain the auditor legal liability, this includes what law that procure such liability?

A: An auditor is expected to complete their tasks in good faith and with integrity and should operate…

Q: oo high, o

A: Since auditors can and often do not seek to review all activities, audit risk is essential to the…

Q: Distinguish between an auditor’s responsibilities to detect and report errors, illegal acts, and…

A: Definition: Auditor: Auditor is an accounting professional hired by a company to review the…

Q: What is the difference between Error and Fraud (as defined in auditing) and how shall the auditor…

A: Definition: Auditor: The auditor is an accounting professional hired by a company to review the…

Q: The audit risk model is the foundation of audit practice. True False

A: Auditing refers to the independent examination of financial statements and other financial…

Q: Explain the ethical fundamental principle of the duty of confidentiality outlining three…

A: Auditor: Auditor is the individual responsible for evaluating the accounting information reported in…

Q: e been misleading

A: Generally Accepted Accounting Principles refer to a systematic set of laws and policies used in…

Q: he factor that distinguishes an error from fraud or other irregularities is A) materiality. B)…

A: Lets understand the basics. Audit is an examination of book of account in order to give an opinion…

Q: Inherent risk and control risk differ from detection risk in which of the following ways? A.…

A: Inherent risk is the risk of misstatement of financial statements due to factors other than flaws in…

Q: Secondary purpose of audit documentation is to provide adequate defense in case of litigation for…

A: Audit documentation, often known as working papers as well as work papers, seems to be a work…

Q: 28. The engagement letter represents the written contract for the engagement, and its primary…

A: The auditors send the client an engagement letter outlining the nature of the engagement, any scope…

Q: What are the differences between business failure, auditor failure, and audit risk? Is it fair to…

A: Audit risk is the risk which arises due to the probability or the chance of reporting the financial…

Q: 5) What are common limitations of Internal Controls? a) Human Error b) Human Fraud c) Cost-Benefit…

A: Internal Control are policies and procedures used by the management to make the efficient use of…

Q: How does the prudent person concept affect the liability of the auditor?

A: Prudence is one of the accounting principle, which says that all anticipated losses should be…

Q: Auditors can help avoid litigation by implementing policies and procedures that ensure all work is…

A: Auditors can help avoid litigation by implementing policies and procedures that ensure all work is…

Q: Which of the following cases provides auditors the broadest exposure for liability to thirdparties…

A: Under the case of Rosenblum Inc. v. Adler., auditors are provided the broadest exposure for…

Q: A number of cases have considered the auditor’s liability in relation to persons other than the…

A: Generally, it is considered that the auditor's liability in relation to person other than the…

Q: Do you think that the provision of nonaudit services for a client with a failed audit is evidence of…

A: Negligence in auditing means the auditor doesn't follow any standard related to auditing and…

Q: Is the auditor’s liability affected if the third party was unknownrather than known? Explain

Q: Generally, the auditor could be legally liable under?

A: Auditing: Auditing refers to an independent examination of financial information of any…

Q: What are some civil and criminal consequences if CPAs/auditors fail to follow professional…

A: The CPA may be held liable to financial users for any fraud and/or intentional deceit committed. Any…

Q: Explain the main areas of focus in the general accepted auditing standards. Explain four actions…

A: Explain the main areas of focus in the general accepted auditing standards. 1. Planning and…

Q: 5. Which of the following is not a primary purpose of audit documentation? * A. To assist in the…

A: Auditing means the independent checking of company operation by outsider. Auditor is a qualified and…

Question

3.An important development in the area of breach of contract by an auditor is contributory negligence.
Required:
Define contributory negligence. Discuss the concept of contributory negligence as it applies to auditing using the example of the AWA case.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Legal, Regulatory and Professional Obligations of Auditors

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Generally, the auditor could be legally liable under? Select one: a. contract law but not under the tort of negligence to third parties b. the tort of negligence to the client and contract law c. the tort of negligence but not contract law to the client d. contract law to third parties and to the client
Explain the auditor legal liability, this includes what law that procure such liability?
Secondary purpose of audit documentation is to provide adequate defense in case of litigation for malpractice. TRUE OR FALSE? WHY?
Is the liability risk to CPAs/auditors appropriate too high, or too low.
28. The engagement letter represents the written contract for the engagement, and its primary objective is to prevent possible misunderstandings between the client and the auditorsSelect one:TrueFalse
Explain the main areas of focus in the general accepted auditing standards. Explain four actions that an audit firm could use to minimize its liability and prevent lawsuit.
Explain contributory negligence.
The audit risk model is the foundation of audit practice. True False
2. A client has departed from GAAP for what you, the auditor, considers to be justifiable. The financial statements would have been misleading if the client had not departed from GAAP. Circumstance: Type of Opinion:
Inherent risk and control risk differ from detection risk in which of the following ways? A. Inherent risk and control risk are calculated by the client B. inherent risk and control risk exist independently of the audit. C. Inherent risk and control risk are controled by the auditor. D. Inherent risk and control risk exist as a result of the auditor's judgement about materiality.
A number of cases have considered the auditor’s liability in relation to persons other than the immediate client. Even so, the AWA case established that: Select one: a. Duty of care and skill means following the accounting standards b.auditors have a contractual duty to oversee and review the work of inexperienced audit staff c.Auditors are only liable for the proportion of damages attributable to their actions d.Auditors have a duty of care only to the shareholders.
5. Which of the following is not a primary purpose of audit documentation? * A. To assist in the formulation of audit conclusion B. To facilitate the review of the audit procedures done by the audit team C. To coordinate the conduct of the audit D. To prepare evidence in the event of a suit against the client E. None of them