chapter4assignment_liyuan_liu - sections, both of which...

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Liyuan Liu 102271542 Assignment 2 Chapter 4 4.14 In this case, lack of privity is not necessarily a valid defence. Because the president of Mountain Ltd had approached Frost and said that the Bank of Train was prepared to increase their loan to Mountain upon receipt of the 2004 financial statements. The auditor had the actual knowledge at the time the audit was performed and to whom the audited financial statements were issued so that the auditor was potentially liable to the third parity which is Bank of Train and the lack of privity is not a valid fefence. Helmut&Co. was negligent. Negligence means failure to exercise reasonable care in the performance of one’s obligations to another. Here because accounts receivable and inventory
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Unformatted text preview: sections, both of which were significant in relation to total asset, they should be audit by the senior partner .However, they just assign the juniors to perform audit. Furthermore, the audit was finished quickly, and only the senior only gave a cursory review of the file and statements. The auditors have assigned unqualified assistants to perform audit tasks, and because of their lack of competence and inappropriate supervision, they failed to find material misstatements that qualified auditors would have discovered. Because Helmut&Cos negligent, they cause this audit failure....
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This note was uploaded on 10/22/2009 for the course ACCT 70360 taught by Professor Pathak during the Spring '09 term at Windsor.

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