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Unformatted text preview: 5-20
a) True, because the auditors were negligent and had prior knowledge that the financial
statements were for the purpose of acquiring a loan from Martinson.
b) True, even though the management team at Sampson skins altered the books Watts and
Williams should have detected it. They provided 20 copies knowing they were potential
lenders and should have done a better job at auditing.
c) False, there is a privity of contract between them since Watts and Williams knew what
the purpose was for the financial statements.
d) False, Watts and Williams can be held liable for constructive fraud and gross or ordinary
negligence since there appears to be no duty of care.
e) True, they were a forseeable user and therefore a primary beneficiary that relied on the
audited financial statements done by Watts and Williams.
a) 1. Existence
b) 3. Valuation and allocation
c) 3. Valuation and allocation
d) 2. Completeness
e) 2. Completeness
f) 3. Valuation and allocation
g) 4. Rights and obligations
h) 3. Valuation and allocation ...
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This note was uploaded on 07/14/2011 for the course ACCT 321 taught by Professor Collins during the Spring '10 term at University of Maryland Baltimore.
- Spring '10