Question

Analyze each of the following situations below and provide your assessment of the potential resolution of each scenario, including potential liability for the auditor or audit firm involved.

a) The audit firm James & Mason, CPA received a subpoena for its documentation related to the audit of Handsome Corporation’s financial statements. The firm has refused to respond, alleging that the documentation is considered privileged communication between the firm and its client.

b) Sara CPA is a defendant in a lawsuit alleging that she should be held liable for gross negligence for a fraud involving the valuation of securities included in the financial statements of one of his clients. Sara was uncertain how to establish a correct valuation for the securities and decided to rely on the price estimation supplied by management.

c) A lawsuit has been filed against Elena CPA, charging here with constructive fraud in the audit of Broughton Company’s financial statements. Elena has examined all the audit documentation in his files and reviewed all relevant auditing standards. She is convinced that his audit fully complies with standards of the profession but is uncertain what he should use as his primary defense tactic.

d) Fuji Film filed for a bankruptcy in January 2012. A recent blog suggested that Fuji’s external auditors should be sued for failing to qualify the firm’s opinion on the financial statements issued before the bankruptcy, even though the fair presentation of the financial statements is not being disputed.

thank you and I really appreciate youe help ~

Answer 1

Answer:-

a);-

• The review firm, James & Mason, CPA. He is right in the reaction gave to the review of the agents made to the Handsome Corporation.
• The firm may think about changing the reaction, if the Handsome Corporation is the one asking for documentation or data in the alternative of its budgetary explanations.

b) :-

• Sara, CPA, if in charge of the carelessness identified with the valuation of the securities incorporated into the money related explanations.
• Nonetheless, the obligation additionally has a place with the organization for the data gave.
• Which should contend in the preliminary the reason that drove him to depend on the value gauge gave and not all alone media and data.

c):-

• Elena is persuaded that he has pursued all principles and systems in playing out the review.
• Subsequently, he can utilize his Non-careless execution upheld by greetings s review documentation as an apparatus to protect himself in the claim.

d):-

• The outside evaluators of Kodak have a duty at the season of rating the circumstance of the organization, in their issued budgetary explanations.
• With a specific end goal to be sued, the sensible introduction of the money related proclamations and their supposition must be questioned, along these lines claiming the essential reasons why Fuji Film petitioned for financial protection in January 2012.