5 Written questions
5 Matching questions
- Securities Act of 1933
- Breach of Contract
- Procedures of Illegal Acts
- US vs Arthur Andersen
- a accused of wholesale destruction of documents relating to the Enron Coporation collapse. Loss of case put Arthur Andersen out of business. Conviction was overturned by U.S. Supreme Court.
- b Indirect: can have future impact,
Auditor must follow up to determine if material
If material - Report (to audit committee), make sure adequately disclosed in financial statements
If not material, inform appropriate level of management
- c requires audited financial statements in registration statements of initial public offerings
- d intentional concealment or misrepresentation of a material fact that causes damage to those deceived. Scienter must be proved.
- e when a person fails to perform a contractual duty
5 Multiple choice questions
- Auditors know audited financial statements were to be used for a particular purpose by a known third party user
- Established the SEC and established requirement for annual audited financial statements
- Auditors should have realized it was reasonably foreseeable that audited financial statements would be used for routine business purposes. Opens door to liability for ordinary negligence to virtually all third parties who rely on the statements
- May conduct investigations and disciplinary proceedings on registered CPA firm and professional employee. Include monetary damages, suspension of firms from engagements with public companies, regerral of criminal cases to Justice Department
- if lose case client owes lawyer nothing, if win lawer get a % of winnings.
5 True/False questions
Litigation Perspective → designed to prevent multiple suits that might result in inconsistent judgements. Lawyers try to identify every potential member of the class.
Unaudited Statements of Nonpublic Companies → Auditors know audited financial statements were to be used for a particular purpose, but auditors did not necessarily know the specific user
Class action suits → designed to prevent multiple suits that might result in inconsistent judgements. Lawyers try to identify every potential member of the class.
Direct Illegal Act → Violations of laws other than those related to reporting: OSHA, FDA, EEOC Laws
Statutory Law → liability concepts are developed through court decisions based on negligence, gross negligence, fraud, or breach of contract