财务审计的合法义务（英文版）.pptxVIP

Legal LiabilityChapter 5 $2 Billion paid in SL LawsuitsErnst Young 1992 $400 millionDeloitte Touche 1994 $312 millionKPMG 1994 $187 millionArthur Andersen 1993 $82 million Lawsuits Against AuditorsExpectation gap on detection of fraudAuditor sued in civil courtBreach of contractTort actions for negligenceCriminal Charges Changed Legal EnvironmentAudit professionals have a responsibility undercommon law to fulfill implied or expressedcontracts with clients.They are liable to their clients for negligenceand/or breach of contract should they fail toprovide the services or not exercise due carein their performance. Business Failure, AuditFailure, and Audit RiskBusinessFailureAuditFailureAuditRisk Business Failure, AuditFailure, and Audit RiskBusiness failureIt occurs when a business is unable torepay its lenders or meet theexpectations of its investors becauseof economic or business conditions. Business Failure, AuditFailure, and Audit RiskAudit failureIt occurs when the auditor issues anerroneous audit opinion as the resultof an underlying failure to complywith the requirements of generallyaccepted auditing standards (GAAS). Business Failure, AuditFailure, and Audit RiskAudit riskIt represents the risk that the auditor willconclude that the financial statementsare fairly stated and an unqualifiedopinion can be issued when, in fact,they are materially misstated. Lack ofprivilegedcommunicationLiability forthe actsof othersPrudentpersonconceptLegal ConceptsAffecting Liability Federalsecurities lawsThird partyClientMajor Sources ofAuditor’s Legal LiabilityCriminalliability Liability to ClientsThe most commonsource of lawsuitsagainst CPAsis from clients. Legal Terms AffectingCPAs’ LiabilityTerms related to contract lawBreach ofcontractThird partybeneficiary NegligenceTo be held liable, the auditor’s work must be shown as negligent.?Negligence (ordinary) is the lack of reasonable care. What would a prudent auditor do in the same circumstances. Following GAA