Principles of Auditing & Other Assurance Services (Irwin Accounting)
20th Edition
ISBN: 9780077729141
Author: Ray Whittington, Kurt Pany
Publisher: McGraw-Hill Education
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Chapter 4, Problem 11RQ
To determine
Compare the rights of the plaintiff under common law and investor in securities under Securities Act, 1933 who sustain losses with respect to bearing the burden of proof.
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What kind of actions might customers pursue against auditors under the common law doctrine of restitution? In each situation, what evidence do clients need to provide before filing a lawsuit?
Your firm proposes to assist Company X (a tax client) in a possible acquisition. When evaluating a potential conflict of interest, you determine that threats are at an acceptable level. What else does the AICPA code require you to do?
a) Apply safeguards that completely eliminate the conflict of interest.
b) Disclose the conflict to the relevant parties and obtain their consent to perform the services.
c) Apply professional judgment to determine your next steps.
d) Disclose the nature of the conflict of interest in your firm's final report.
The Private Securities Litigation Reform Act of 1995 imposes proportionate liability on the CPA who:
Chapter 4 Solutions
Principles of Auditing & Other Assurance Services (Irwin Accounting)
Ch. 4 - Prob. 1RQCh. 4 - Prob. 2RQCh. 4 - Prob. 3RQCh. 4 - Prob. 4RQCh. 4 - Prob. 5RQCh. 4 - Prob. 6RQCh. 4 - Prob. 7RQCh. 4 - Prob. 8RQCh. 4 - Prob. 9RQCh. 4 - Prob. 10RQ
Ch. 4 - Prob. 11RQCh. 4 - Prob. 12RQCh. 4 - Prob. 13RQCh. 4 - Prob. 14RQCh. 4 - Prob. 15RQCh. 4 - Prob. 16RQCh. 4 - Prob. 17RQCh. 4 - Prob. 18RQCh. 4 - Prob. 19RQCh. 4 - Prob. 20QRACh. 4 - Prob. 21QRACh. 4 - Prob. 22QRACh. 4 - Prob. 23QRACh. 4 - Prob. 24QRACh. 4 - Prob. 25QRACh. 4 - Prob. 26QRACh. 4 - Gordon Moore, CPAs, were the auditors of Fox ...Ch. 4 - Prob. 28AOQCh. 4 - Prob. 28BOQCh. 4 - Prob. 28COQCh. 4 - Prob. 28DOQCh. 4 - Prob. 28EOQCh. 4 - Prob. 28FOQCh. 4 - Prob. 28GOQCh. 4 - Prob. 28HOQCh. 4 - Prob. 28IOQCh. 4 - Prob. 28JOQCh. 4 - Prob. 28KOQCh. 4 - Prob. 28LOQCh. 4 - Prob. 29OQCh. 4 - Prob. 30OQCh. 4 - Match the important cases listed below with the...Ch. 4 - Prob. 32OQCh. 4 - Prob. 33OQCh. 4 - Prob. 34PCh. 4 - Prob. 35PCh. 4 - Prob. 36PCh. 4 - Charles Worthington, the founding and senior...Ch. 4 - Prob. 38PCh. 4 - Prob. 39PCh. 4 - Prob. 40PCh. 4 - Prob. 41ITCCh. 4 - Prob. 42RDC
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- Select the best answer. Which of the following statements regarding transfers of property or services is true? For a transfer of property to a corporation, no gain is recognized by the taxpayer if the O A. transferred property is encumbered with liabilities in excess of the taxpayer's basis in the property. O O O If receipt of stock is subject to a substantial risk of forfeiture, income is recognized by th B. recipient in the year the stock is received even though the substantial risk of forfeiture h lapsed. If the contributing partner receives a capital interest in the partnership upon contributi C. services, the contributor will be taxed on the transfer when the contributor actually rec profits. In order for an exchange of services to a partnership for a profit interest to qualify as a D. nontaxable event, the service partner must provide services to the partnership or for it benefit, and the services must be provided by the service partner in his capacity as a p Submit Answersarrow_forwardState your agreement/disagreement and explain your answer: A taxpayer who intends to challenge an IRS tax assessment should carefully consider several factors when selecting the court in which to pursue initial litigation.arrow_forwardWhat does the term "hazards of litigation" mean in the context of taxation?arrow_forward
- What types of actions may an auditor be liable to a client under common law? Why would the clients prefer to sue the auditor for tort action rather than a breach of contract?arrow_forwardWhat parameters would you place on the use of the automatic stay provision of the Bankruptcy Code, 11 USC 362, to make it fair to both debtors and creditors?arrow_forwardIn what circumstances can a taxpayer challenge an assessment outside the ordinary appeal process. Discussion should be strictly based on statutory and common law. Explain briefly.arrow_forward
- Which of the following would be considered a self-interest threat? When a member of the assurance team was previously a director or officer of the assurance client Potential employment with an assurance client A member of the assurance team has a close family member who is a director or officer of the assurance client Acting as the client’s advocate in a legal proceedingarrow_forwardWhat is fairness (in bankruptcy)?arrow_forwardIf civil tax fraud pursuant to IRC § 6663 is asserted by the IRS, the burden of proof falls upon the IRS by what standard? Select one: a. beyond reasonable doubt b. clear and convincing c. preponderance of evidence d. the taxpayer because the IRS.arrow_forward
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