Notes_for_3.23_BB

Notes_for_3.23_BB - Topic 4 additional tutorial notes

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Notes for 3.23_BB ACCT3101 TOPIC 4 Notes for 3.23 FRAMEWORK - DUTIES OF AUDITORS When examining questions relating to the auditor s liability, or consequences for audit failure, consider the following framework. 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? 7. What defences are available to the auditor? QUESTION 3.23. THIS IS QUITE A COMPLEX QUESTION AS IT IS VERY OPEN ENDED. The main facts/circumstances: o Parties: o National Fertiliser Distributors (NFD) client o Takeover offer by Cornerd Holdings 2 months later it is discovered inventories over value o Inventory o Auditors did not attend all stock takes except Sydney o 50% of inventory purportedly held at Bathurst did not exist o Did not factor in obsolescence o Audit o Under pressure to finish in 1 month
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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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Notes_for_3.23_BB - Topic 4 additional tutorial notes

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