Legal Liability
I was really careless with reckless disregard.
What is gross negligence?
A clean opinion; the opinion companies want.
What is Unmodified or Unqualified?
Auditors provide this type of assurance regarding financial statements.
What is reasonable assurance?
Having a questioning mind, being alert to conditions which indicate possible misstatement, and a critical assessment of audit evidence.
What is Professional skepticism?
Law enacted in 2002 in response to accounting scandals that created the PCAOB.
What is Sarbanes-Oxley Act?
To be liable for negligence, auditors must have been aware F/S would be used for a particular purpose, according to this case.
What is Ultramares?
Audit opinion issued for a departure from GAAP affecting only the balance of one account.
What is qualified opinion?
Examinations, reviews, and agreed-upon procedures.
What are 3 types of attestation engagements?
A person on the attest team or in the position to influence the engagement.
What is covered member?
Regulates the initial sale of securities.
What is Securities Act of 1933?
Intentional concealment of material facts causing damages to those deceived.
What is fraud?
The opinion issued when misstatements are material and pervasive within the F/S.
What is an adverse opinion?
This type of engagement provides the highest level of assurance.
What is an examination (audit)?
Even though a covered member may not have violated independence rules (independence in fact), this may cause concern if the covered member has routine dinners with the CEO of the audited entity.
What is Independence in Appearance?
Source of legal action based on prior court cases.
What is common law?
The plaintiff relied on the financial statements.
What is proximate cause?
The title of the CPA's audit report letter includes the words Registered and ____________.
What is independent?
Two other types of audits, besides financial.
What are compliance and operational audits?
Someone with primary responsibility for significant accounting functions that support the financial statements
What is a key person?
Regulates the trading of securities after initial distribution.
What is Securities Exchange Act of 1934?
In this approach, to be held liable, the identity of 3rd party need not be known.
What is Restatement Approach?
The opinion issued when auditors can provide no opinion due to a scope limitation.
What is disclaimer of opinion?
Tax service, management consulting, and bookkeeping services.
What are non-assurance services?
Not returning client records could be called this.
What is an Act Discreditable?
Source of legal action based on violation of written laws.
What is statutory law?