Question ( Auditing ) The CPA firm of Angeles, Belen, and Cruz was expanding very rapidly. Consequently, it hired several junior accountants, including a man named Dantes. The partners of the firm eventually became dissatisfied with Dantes' production and warned him that they would be forced to discharge him unless his output increased significantly. At that time, Dantes was engaged in audits of several clients. He decided that to avoid being fired, he would reduce or omit entirely some of the standard auditing procedures listed in audit programs prepared by the partners. One of the CPA firm's clients, Best Corp., was in serious financial difficulty and had adjusted several of the accounts being examined by Dantes to appear financially sound. Dantes prepared fictitious working papers in his home at night to support purported
Question ( Auditing )
The CPA firm of Angeles, Belen, and Cruz was expanding very rapidly. Consequently, it hired several junior accountants, including a man named Dantes. The partners of the firm eventually became dissatisfied with Dantes' production and warned him that they would be forced to discharge him unless his output increased significantly. At that time, Dantes was engaged in audits of several clients. He decided that to avoid being fired, he would reduce or omit entirely some of the standard
Required:
Would the CPA firm be liable to the creditors who extended the money because of their reliance on the erroneous financial statements if Best Corp should fail to pay them? Explain
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