Auditing: A Risk Based-Approach (MindTap Course List)
11th Edition
ISBN: 9781337619455
Author: Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher: Cengage Learning
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Question
Chapter 4, Problem 6RQSC
a.
To determine
Breach of Contract
A breach of contract is a failure to do what the contract requires. It is an unjustifiable failure by a party who promises to act according to the provision of the agreement.
To explain: The justification given by an auditor for defending a suit under breach of contract.
b.
To determine
Statutory Law
Statutory Law is a written law which passed by the legislature. It is created deliberately by the government through elected legislators and an official legislative.
To explain: The justification given by an auditor for defending a suit under statutory law.
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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?
What elements does a plaintiff have to prove to be successful in a case against a
negligent auditor?
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
Chapter 4 Solutions
Auditing: A Risk Based-Approach (MindTap Course List)
Ch. 4 - Prob. 1CYBKCh. 4 - Prob. 2CYBKCh. 4 - Prob. 3CYBKCh. 4 - Prob. 4CYBKCh. 4 - Prob. 5CYBKCh. 4 - Prob. 6CYBKCh. 4 - Prob. 7CYBKCh. 4 - Prob. 8CYBKCh. 4 - Prob. 9CYBKCh. 4 - Prob. 10CYBK
Ch. 4 - Prob. 11CYBKCh. 4 - Prob. 12CYBKCh. 4 - Prob. 1RQSCCh. 4 - Prob. 2RQSCCh. 4 - Prob. 3RQSCCh. 4 - Prob. 4RQSCCh. 4 - Prob. 5RQSCCh. 4 - Prob. 6RQSCCh. 4 - Refer to the Focus on Fraud feature “Moss Adams...Ch. 4 - Prob. 8RQSCCh. 4 - Prob. 9RQSCCh. 4 - Prob. 10RQSCCh. 4 - Prob. 11RQSCCh. 4 - Prob. 12RQSCCh. 4 - Prob. 13RQSCCh. 4 - Prob. 14RQSCCh. 4 - Prob. 15RQSCCh. 4 - Prob. 16RQSCCh. 4 - Prob. 17RQSCCh. 4 - Prob. 18RQSCCh. 4 - Prob. 19RQSCCh. 4 - Prob. 20RQSCCh. 4 - Prob. 21RQSCCh. 4 - Able Corporation decided to make a public offering...Ch. 4 - KPMG (LO 1, 2, 3) KPMG LLP served as the external...Ch. 4 - ToshIba, EY (LO 1, 2, 3) In 2015, the business...
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Similar questions
- What is the auditor's role when a client fails to follow the law?arrow_forwardWhat is the auditors responsibility regarding the noncompliance with laws by a client?arrow_forwardWhat 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?arrow_forward
- What defenses are available to auditors against suits brought by clients under common law? Against suits brought by third parties under common law?arrow_forwardHow does the prudent person concept affect the liability of the auditor?arrow_forwardWhat is the auditor's obligation in light of the prudent person concept?arrow_forward
- For what type of actions can clients bring suit against auditors under common law? What must clientsprove prior to bringing suit in each case?arrow_forwardWhat does a third-party user of financial statements have to prove under common law in a suit against an auditor for the auditor's negligence?arrow_forwardIf either party fails to perform their contractual obligations according to the contract terms, it will usually result in a breach of contract. The scope and nature of an auditor's contractual obligation to a client ordinarily is established in the: Select one: a. Corporations Act 2001. b. Management letter. c. Client’s constitution. d. Engagement letter.arrow_forward
- Distinguish between the legal concepts of actually foreseen third-party users and reasonably foreseeable third-party users. How does each concept establish a basis for an auditor’s legal liability to third parties?arrow_forwardAuditors may be held liable to both their clients and third parties under common law. a. What must a client prove to recover its losses from the auditors under common law? b. In a court that adheres to the precedent set by the Ultramares v. Touche case, what must an ordinary third party prove to recover losses from the auditors under common lawarrow_forwardHow does the auditor’s opinion differ between scope limitationscaused by client restrictions and limitations resulting from conditions beyond the client’scontrol? Under which of these two will the auditor be most likely to issue a disclaimer ofopinion? Explain.arrow_forward
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