Topic 4 tutorial notes

Topic 4 tutorial notes - ACCT3101 Topic 4 Tutorial Notes...

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ACCT3101 Topic 4 Tutorial Notes – ARENS CH 3 In answering the questions from Arens from ch 3, emphasize the framework that the learning guide establishes, then fit the answer around each question. 1. Distinguish the auditors statutory duties from common law duties. 2. Common law duties to client, can be in contract of tort of negligence 3. The requirements of negligence are 4. What is the standard of care (ie due care) expected? 5. What is the liability to third parties? 6. What loss is recoverable? Although in professional negligence the textbook talks about the duty of care based on a relationship of proximity, tort law in Australia no longer uses that word ‘proximity’. Instead, refer to ‘relationship of reliance’ in the High Court in Esanda case. 1
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FRAMEWORK FRAMEWORK - DUTIES OF AUDITORS When examining questions relating to the auditor’s liability, or consequences for audit failure, consider the following framework (this is a summary of what is in the learning guide). 1. Distinguish the auditors statutory duties from common law duties. ± Corporations Act o The main statutory duties of auditors to perform the audit (s307-311) o Duties in relation to independence issues s324CA – CH o Other misc duties and liabilities eg s1308 o There are many provisions of the Act that are strict liability and will give rise to criminal offences. ± Other legislation, eg Trade practices Act and fair trading for misleading and deceptive statements 2. Common law duties to client, can be in contract of tort of negligence ± Privity of contract between client and auditor only – statutory duties will form part of the contract: AWA case. ± For tort, establish the duty of care – between client and auditor, duty is owed:
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This note was uploaded on 08/24/2010 for the course ACCT 3101 taught by Professor Drmarcsim during the Two '09 term at Queensland.

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Topic 4 tutorial notes - ACCT3101 Topic 4 Tutorial Notes...

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