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Business Accounting Auditing And Assurance Services

Differentiate among the auditor’s potential liability to the client, liability to third parties under common law, civil liability under the securities laws, and criminal liability. State one situation for each type of liability in which the auditor can be held legally responsible.

Differentiate among the auditor’s potential liability to the client, liability to third parties under common law, civil liability under the securities laws, and criminal liability. State one situation for each type of liability in which the auditor can be held legally responsible.

Solution Summary: The author distinguishes between auditor's legal liability to the client, civil liability under the securities laws, and criminal liability.

Auditing And Assurance Services

Auditing And Assurance Services

17th Edition

ISBN: 9780134897431

Author: ARENS, Alvin A.

Publisher: PEARSON

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Question

Definition Definition Costs that a business is responsible for paying, should a particular event potentially occur in the future. Also called a potential liability, a contingent liability is generally recorded only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly. The Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Principles (IFRS) make it mandatory for the companies to record any contingent liability taking the principles of full disclosure, materiality, and prudence into consideration.

Chapter 5, Problem 10RQ

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Differentiate among the auditor’s potential liability to the client, liability to third parties under common law, civil liability under the securities laws, and criminal liability. State one situation for each type of liability in which the auditor can be held legally responsible.

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Chapter 5, Problem 9RQ

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