Please step by step solutions TitleNora, an accountant, prepares a financial statement as part of a registration statement that Omega,.DescriptionNora, an accountant, prepares a financial statement as part of a registration statement that Omega, Inc.,files with the Securities and Exchange Commission before making a public offering of securities. Thestatement contains a misstatement of material fact that is not attributable to Nora's fraud or negligence.Pat relies on the misstatement, buys some of the securities, and suffers a loss. Can Nora be held liable toPat? Explain. (See Potential Liability of Accountants under Securities Laws.)

1. Overview of Section 11 Liability and Securities Laws: - In the US, the issuing and selling of…

Answered: Title Nora, an accountant, prepares a…

Contemporary Auditing

11th Edition

ISBN:9781337650380

Author:KNAPP

Publisher:KNAPP

Chapter1: Comprehensive Cases

Section1.8: Livent, Inc.

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Title Nora, an accountant, prepares a financial statement as part of a registration statement that Omega,. Description Nora, an accountant, prepares a financial statement as part of a registration statement that Omega, Inc., files with the Securities and Exchange Commission before making a public offering of securities. The statement contains a misstatement of material fact that is not attributable to Nora's fraud or negligence. Pat relies on the misstatement, buys some of the securities, and suffers a loss. Can Nora be held liable to Pat? Explain. (See Potential Liability of Accountants under Securities Laws.)
The following paragraphs describe fraudulent accounting committed by the company Rite-Aid in 1999. After reading the paragraphs, list the journal entries you think Rite-Aid would have used to do what is described here. You will have to make an educated guess as to what journal entries the company would use to cover up the fraud. Rite Aid failed to record an accrued expense for stock appreciation rights it had granted to employees, in a program that gave the recipients the right to receive cash or stock in amounts tied to increases in the market price of Rite Aid stock. Rite Aid should have accrued an expense of $22 million in FY 1998 and $33 million in FY 1999 for these obligations.
Analyze each of the following situations below and provide your assessment of the potential resolution of each scenario, including potential liability for the auditor or audit firm involved. Yasmeen CPA is a defendant in a lawsuit alleging that she should be held liable for gross negligence for a fraud involving the valuation of securities included in the financial statements of one of his clients. Yasmeen was uncertain how to establish a correct valuation for the securities and decided to rely on the price estimation supplied by management. A lawsuit has been filed against Elena CPA, charging here with constructive fraud in the audit of Broughton Company’s financial statements. Elena has examined all the audit documentation in his files and reviewed all relevant auditing standards. She is convinced that his audit fully complies with standards of the profession but is uncertain what he should use as his primary defense tactic. Canon Film filed for a bankruptcy in January 2012. A…
Rohini works as an accountant with PQR Ltd. She embezzled $20,000 from the company bank account. She was caught in the annual audit of the company. She justified her action saying that her employer has not given any pay rise, so she had to take $20,000 from the account. Explain in your own words the internal control that may have failed in the above situation. Also explain which element of the fraud triangle Rohini is referring to justify her action.
Mark Buffalo works for a mid-size accounting firm in Boston. One day he overhears a colleague talking to a friend on his cellphone. Mark gasps when he realizes the colleague is sharing one of their client's confidential information, likely as an insider trading tip. As a member of the AICPA, Mark is required to report this discreditable act to the Boston chapter of the AICPA. Select one: True False
When an entity uses a trust company as custodian of its marketable securities, the possibility of concealing fraud most likely would be reduced if thea. Trust company has no direct contact with the entity employees responsible for maintaining investment accounting records.b. Securities are registered in the name of the trust company rather than the entity itself.c. Interest and dividend checks are mailed directly to an entity employee who is authorized to sell securities.d. The trust company places the securities in a bank safe deposit vault under the custodian’s exclusive control.
An accountant is hired by a company to do an audit on their financial statements. The accountant does everything she is asked. 16 days after the audit, the CFO is arrested for embezzlement. The stockholders sue the accountant, suggesting that she should have discovered the embezzlement during the audit. Should the court find that the accountant is negligent? Group of answer choices A. Yes, because an accountant is hired to determine if there is embezzlement B. Yes, but only if it is shown than an ordinary accountant would have also uncovered the embezzlement C. No, because the accountant was hired by the CFO, so therefore it would have been a conflict of interest D. Yes, because the accountant was hired by the CFO, therefore it is likely the accountant is also guilty
The following paragraphs describe fraudulent accounting committed by the company Rite-Aid in 1999. After reading the paragraphs, list the journal entries you think Rite-Aid would have used to do what is described here. You will have to make an educated guess as to what journal entries the company would use to cover up the fraud.Under Generally Accepted Accounting Principles, Rite Aid should have written off the pertinent "dead deal" expenses at the time that it decided not to build on each specific site. Such writeoffs would have reduced reported income in the relevant periods. Instead, Rite Aid continued to carry these items on its balance sheet as assets. By the end of FY 1999, the accumulated dead deal expenses totaled $10.6 millio
ZZZZ best company fraud. in testimony before Congress, George Greenspan reported that one means he used to audit the insurance restoration contracts was to verify that his client actually received payment on those jobs. How can such apparently reliable evidence lead an auditor to an improper conclusion?
Chapter 3 of the textbook discusses many methods individuals can use to communicate financial statement information to stakeholders in a fraudulent manner. Choose one method and explain how perpetrators use it. Which of the three “M’s of financial reporting fraud does this method fall under? Cite a case related to the method.
After Bill and Mercedes' tax return was selected for audit, Bill read on the Internet speculation that filing a paper tax return (instead of filing electronically) and extending a tax return deadline decrease the chance of IRS audit. Bill has convinced Mercedes that they need to use these strategies in the future and look for other ways to avoid audit. Questions for discussion include: 1. What are the timing requirements for filing a tax return and paying taxes owed? 2. Does Bill's action likely violate any IRS regulation? 3. If Bill's action does not violate IRS rules, it is ethical? Please make sure to respond to other students' discussion answers, especially if they have a different point of view than yours.
Refer to the Focus on Fraud feature “Moss Adams and the Meridian Mortgage Funds Fraud.” a. Why was Moss Adams sued by the trustee for the bankrupt Meridian Mortgage? b. What would the trustee have to prove in order for the courts to hold Moss Adams liable for damages?

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