Questions from Auditing and Assurance

Q: How was the Continental Vending case unusual with respect to penalties levied

How was the Continental Vending case unusual with respect to penalties levied against auditors?

Q: Why did Congress enact the Racketeer Influenced and Corrupt Organizations Act?

Why did Congress enact the Racketeer Influenced and Corrupt Organizations Act? Why has it been of concern to auditors? What subsequent developments have reduced this concern?

Q: How does the SEC regulate auditors who appear and practice before the

How does the SEC regulate auditors who appear and practice before the commission?

Q: In the 1136 Tenants’ Corporation case, what was the essential difference

In the 1136 Tenants’ Corporation case, what was the essential difference in the way the client and the CPAs viewed the work to be done in the engagement?

Q: Describe a situation in which a set of audit working papers might

Describe a situation in which a set of audit working papers might be used by third parties to support a charge of gross negligence against the auditors.

Q: What are the principal use and significance of an audit report to

What are the principal use and significance of an audit report to a large corporation with securities listed on a stock exchange? To a small family-owned enterprise?

Q: Comment on the following statement: While engagement letters are useful for

Comment on the following statement: While engagement letters are useful for audit engagements, they are not necessary for compilation and review engagements.

Q: Rogers and Green, CPAs, admit they failed substantially to follow

Rogers and Green, CPAs, admit they failed substantially to follow generally accepted auditing standards in their audit of Martin Corporation. “We were overworked and understaffed and never should have...

Q: Distinguish between ordinary negligence and gross negligence within the context of the

Distinguish between ordinary negligence and gross negligence within the context of the CPAs’ work.

Q: What is meant by the term privity? How does privity affect

What is meant by the term privity? How does privity affect the auditor’s liability under common law?