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Unformatted text preview: 1 Chapter 5 Legal Liability 1. Changed Legal Environment a. Reasons for high number of legal actions against auditors – why? (An open-ended question.) b. Business failure, audit failure and audit risk - Business failure occurs when _________________________________________________________________________________ - Audit failure occurs when _________________________________________________________________________________ - Audit risk is _________________________________________________________________________________ The concept of “due care”, what is it? Review Question 5-3 2. Legal Concept Affecting Liability a. The “Prudent person concept”- While performing an audit, the auditor is not a ____________ or ___________, but the auditor is expected to perform his or her work with ______________, and is not expected to be ____________. - An auditor undertakes for _____________ and ______________, but not for _________________. - An auditor is liable for ________________, _________________, or ________________; but not for losses consequent upon ______________ or ________________. Review Question 5-4 b. Liability for the acts of others - In general, the partners are jointly liable for the civil actions against a partner, except __________ ________________________________________________________________________________ - The partners may also be liable for the work of others on whom they rely under the laws of agency –...
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This note was uploaded on 03/23/2011 for the course ACC 123 taught by Professor W during the Spring '11 term at Prince George's Community College, Largo.
- Spring '11