In: Accounting
The following are independent situations. Analyze each situation and provide your assessment of the potential resolution of each scenario, including potential liability for the auditor.
• The audit firm, Smith and Jones, LLP. He is correct in the response provided to the audit of the financiers made to the Sanders Corporation. The firm may consider changing the response, if the Sanders Corporation is the one requesting documentation or information in the option of its financial statements.
• John Doe, CPA, if responsible for the negligence related to the
valuation of the securities included in the financial statements.
However, the responsibility also belongs to the administration for
the information provided. Which should argue in the trial the
reason that led him to rely on the price estimate provided and not
on their own media and information.
• Joan Rogan, as a member of a limited liability company, is
responsible for the capital subscribed in said company. The
plaintiff can not sue him requesting the return of his personal
property, because they are unrelated to the audit firm.
• The external auditors of Kodak have a responsibility at the time
of rating the situation of the company, in their issued financial
statements. In order to be sued, the reasonable presentation of the
financial statements and their opinion must be disputed, thus
alleging the primary reasons why Eastman Kodak filed for bankruptcy
in January 2012.