In her article about possible changes to the legal liability of auditors due to the modification of GAAS and the audit report as a result of “The Clarity Project,” Nancy Reimer points out that although the goal of the “clarified standards” is to make GAAS easier to read, understand and apply, the new modified standards establish a higher “standard of care.” A failure to meet these modified standards could increase a practitioner’s exposure to legal liability. Explain how the auditor’s legal liability might increase as a result of changes to the audit report discussed in Chapter 5.
Answer to relevant QuestionsHas the accounting profession created a situation in which the auditors’ ethical behavior is impaired by their professional obligations? How does the profession’s view of such obligations relate to how courts tend to ...1. The auditors (P&T) claimed to have no duty to Anjoorian as a shareholder of FCC. The Rhode Island Supreme Court acknowledged that the duty of accounting professionals to third parties is an open question in the state, but ...In Arthur Levitt’s speech that was referred to in the opening quote he also said: “.I fear that we are witnessing an erosion in the quality of earnings, and therefore, the quality of financial reporting. Managing may be ...Comment on the statement that what a company’s income statement reveals is interesting but what it conceals is vital.Schilit recognizes that cash flow shenanigans also exist when a company takes actions to send their desirable cash inflows to the most important section (Operating) and all of the unwanted cash out flows to the other ...
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