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Chap020 - Chapter 20 Legal Liability Chapter 20 Legal...

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Chapter 20 - Legal Liability Chapter 20 Legal Liability Learning Objectives Review Questions Multiple- Choice Questions Problems Discussion Cases ACL Problems LO 1 : Understand the four general stages in an audit-related legal dispute. 1 LO 2: Know the definitions of key legal terms. 2 14 26 LO 3: Know the auditor’s liability to clients under common law. 2,3,4 14,15,16 26,27 LO 4 : Understand the auditor’s liability to third parties under common law. 2,5 14,16,17 26,27 30 LO 5: Understand the auditor’s legal liability under the Securities Exchange Act of 1933. 6 18,19, 20,21 27,28,29 30 LO 6 : Understand the auditor’s legal liability under the Securities Act of 1934. 6,7 22 27,28,29 30 LO 7: Be able to explain how the Private Securities Litigation Reform Act of 1995 and the Securities Litigation Uniform Standards Act of 1998 relieve some of the auditor’s legal liability. 8 23 LO 8 : Understand the auditor’s legal liability under the Sarbanes- Oxley Act of 2002. 9 24 31 LO 9: Know how the SEC and PCAOB can sanction an auditor or audit firm. 10 24 LO 10: Understand how the Foreign Corrupt Practices Act can result in legal liability for auditors. 11 25 LO 11: Understand how the Racketeer Influenced and Corrupt Organizations Act can affect the auditor’s legal liability. 12 LO 12: Be able to explain how an auditor can be held criminally liable for various federal and state laws. 9,13 24 Be able to apply audit information technology tools. ACL 20-1
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Chapter 20 - Legal Liability END OF CHAPTER MATERIALS COMPARISION CHART Number in 7 th edition Comparison Number in 6 th edition 20-1 Unchanged 20-1 20-2 Unchanged 20-2 20-3 Unchanged 20-3 20-4 Unchanged 20-4 20-5 Unchanged 20-5 20-6 Unchanged 20-6 20-7 Unchanged 20-7 20-8 Unchanged 20-8 20-9 Unchanged 20-9 20-10 Unchanged 20-10 20-11 Unchanged 20-11 20-12 Unchanged 20-12 20-13 Unchanged 20-13 20-14 Revised 20-14 20-15 Unchanged 20-15 20-16 Revised 20-16 20-17 Revised 20-17 20-18 Unchanged 20-18 20-19 Unchanged 20-19 20-20 Unchanged 20-20 20-21 Revised 20-21 20-22 Revised 20-22 20-23 Unchanged 20-23 20-24 Unchanged 20-24 20-25 Revised 20-25 20-26 Revised 20-26 20-27 Revised 20-27 20-28 Revised 20-28 20-29 Unchanged 20-29 20-30 Unchanged 20-30 20-31 Unchanged 20-31 20-2
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Chapter 20 - Legal Liability Chapter 20 presents a discussion of legal liability. We usually start our discussion of this topic by referring back to the agency or stewardship notions included in earlier chapters. It is easy to show the students how parties to the contract (principals and agents) can have recourse against the auditor if an inappropriate audit report is issued. [LO 1] Overview We start coverage here with a description of the four general stages in the initiation and disposition of audit-related disputes. We then cover the definitions of key legal terms in Table 20-1. It is important for the students to understand these terms. Next, we discuss the types of liability and actions that can result in liability for auditors (refer the students to Table 20-2). We point out that the remaining discussion will cover each of these types of liability.
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