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solution 5-22 (A)

solution 5-22 (A) - Chapterjjolutions_Manual[zoos(eat...

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Unformatted text preview: Chapterjjolutions_Manual [zoos-(eat 14:09:23) - Windows Internet Eutplorer 'Eiie Edit Em Egymihfi 100k (Lid-p bp auditing and assurance services 1 E turn} [‘53] HF Deals «'3: ”'th Enaofish by HP B HP Games 9"“3 mega @- Elfi'-El "ti _;+,_j,& §:@_ ~- tfi & lag... EYouTube..A-m-Men.. [@Chaelegswooomy... x |@.mm.;5_wmmm.l I E} , t”? fl _ fl - @fiees' @111qu )) Baum -®FDF am!) Comments {0] 5-22 a. The legal issues involved in this case revolve around the auditor's compliance with auditing standards and contributory negligence. Auditing standards require that accounts receivable be confirmed by the auditor in most circumstances. This procedure was employed in the case, and the legal issue is whether or not the auditor used due care in following up on the confirmation replies received. As a defense in the lawsuit. the auditor would claim to have followed auditing standards by properly confirming accounts receivable. In addition, the auditor may defend him or herself by testifying that the company controller was responsible for investigating the reason for the differences reported on the confirmation replies. The auditor may state that he or she had a I right to conclude that the controller had reviewed the explanations provided by the bookkeeper. and concluded they were correct. The auditor might also use the defense that there was contributory negligence. The controller should not have delegated the work to the bookkeeper and should have recognized the potential for intentional wrongdoing by the bookkeeper. a Internet l Protected Mode: 0n QIDOSG ' .:: ...
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