Auditing & Assurance Services: A Systematic Approach (Irwin Accounting)
10th Edition
ISBN: 9780077732509
Author: William F Messier Jr, Steven M. Glover Associate Professor, Douglas F. Prawitt Associate Professor
Publisher: McGraw-Hill Education
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Question
Chapter 20, Problem 20.6RQ
To determine
Concept Introduction:Auditor legal liability includes the legal activities against or for the auditors. The auditor is in the contractual relationship with theclient and if he does not perform according to the terms of the contract, the client can claim against the auditor.As per the common law, the auditor is liable for the negligence, breach of contract, and fraud procedure claimed by the clients.
To discuss: The difference between the securities act of 1933and the securities act of 1934, and reasonsthat make easier to plaintiff to sue an auditor under the securities act of 1933.
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Contrast the auditor’s liability under the Securities Act of 1933 withthat under the Securities Exchange Act of 1934.
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What are the major differences in auditors’ liability under the Securities Act of 1933 and the Securities Exchange Act of 1934?
Chapter 20 Solutions
Auditing & Assurance Services: A Systematic Approach (Irwin Accounting)
Ch. 20 - Prob. 20.1RQCh. 20 - Prob. 20.2RQCh. 20 - Prob. 20.3RQCh. 20 - Prob. 20.4RQCh. 20 - Prob. 20.5RQCh. 20 - Prob. 20.6RQCh. 20 - Prob. 20.7RQCh. 20 - Prob. 20.8RQCh. 20 - Prob. 20.9RQCh. 20 - Prob. 20.10RQ
Ch. 20 - Prob. 20.11RQCh. 20 - Prob. 20.12RQCh. 20 - Prob. 20.13RQCh. 20 - Prob. 20.14MCQCh. 20 - Prob. 20.15MCQCh. 20 - Prob. 20.16MCQCh. 20 - Prob. 20.17MCQCh. 20 - Prob. 20.18MCQCh. 20 - Prob. 20.19MCQCh. 20 - Prob. 20.20MCQCh. 20 - Prob. 20.21MCQCh. 20 - Prob. 20.22MCQCh. 20 - Prob. 20.23MCQCh. 20 - Prob. 20.24MCQCh. 20 - Prob. 20.25MCQCh. 20 - Prob. 20.26PCh. 20 - Prob. 20.27PCh. 20 - Prob. 20.28PCh. 20 - Prob. 20.29P
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- What are the defenses that someone can take to charges of violations under the 1933 securities act?arrow_forward1)List and explain the General Standards. 2)What are the Auditor’s Liabilities under Common Law and Contract Law. 3) What are the Auditor’s Liabilities under Statutory Law (SEC Acts and Other Acts of Congress). Securities Act 1933: Securities & Exchange Act 1934: Foreign Corrupt Practices Act (1977): Private Securities Litigation Reform Act (1995/1998): Sarbanes-Oxley Act (2002):arrow_forwardPlease answer the question: After the Securities Act of 1933 and Securities Exchange act of 1934, what did auditors focus on? Why was the change in focus necessary?arrow_forward
- An auditor working with a publicly traded client learns that the client has been completing stock trades based on insider information. How should the auditor report any violations of the law?arrow_forwardWhat was established as a result of the passage of the Dodd Frank law by Congress to provide incentives to assist in the enforcement of federal securities law violations?arrow_forwardThe Securities Act of 1933 and Securities Exchange Act of 1934 containa. Civil liability provisions applicable to auditors. b. Criminal liability provisions applicable to auditors. c. Neither a nor b. d. Both a and b.arrow_forward
- Under which act (or acts) must a client prove that a CPA has performed an audit with due diligence to establish that CPA's liability? Securities Securities Exchange Act of 1933 Act of 1934 Yes A. Yes B. Yes No C. No Yes D. No No Multiple Choice 22arrow_forwardAn auditor working with a publicly traded client learns that the client has been completing stock trades based on insider information. how should the auditor fulfill the legal obligations?arrow_forwardWhat would happen or what will the possible scenarios be for the employees and shareholders of a certain company where they work fails to register with the Securities Act of 1933?arrow_forward
- The Private Securities Litigation Reform Act of 1995 imposes proportionate liability on the CPA who:arrow_forwardMason is a financial analyst who specializes in securities. When providing an analysis of securities to which he has a personal connection, he discloses his conflict of interest. By doing so, which federal regulation is he complying with?arrow_forwardUnder the Private Securities Litigation Reform Act (the Act), independent auditors are required to firsta. Report in writing all instances of noncompliance with the Act to the client’s board of directors.b. Report to the SEC all instances of noncompliance with the Act they believe have a material effect on financial statements if the board of directors does not first report to the SEC.c. Report clearly inconsequential noncompliance with the Act to the audit committee of the client’s board of directors.d. Resign from the audit engagement and report the instances of noncompliance with the Act to the SEC.arrow_forward
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