Exam Essay Questions.docx - Legal Liability Outsourcing...

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Legal Liability & Outsourcing / Offshoring Audit Procedures 1) Research Question: liability associated with an audit failure when work is performed by another office of the same firm or outsourced to a separate firm, and whether the work is performed domestically or in another country. o Legal Liability : Compensatory and Punitive Damages 2) Importance: Accounting firms have steadily increased the use of outsourcing and offshoring of professional services including independent audit procedures. While firms suggest that the work is of higher quality and similar litigation risk, questions remain as to whether public perceptions may be more negative. 3) Result: 1. Work completed by another domestic office of the firm has the highest expected quality and lowest risk, 2. while work that is outsourced offshore is expected to be lowest quality and highest risk—consistent with proximity theory. Analytical Procedure Practices 1) Research Question: 1. Examining the practices of the Big 4 CPA firms in conducting APs 2.

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