Written Assignment 2

Written Assignment 2 - Dustin Taylor Written Assignment 2...

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Dustin Taylor Written Assignment 2 ACC-411 TESC September 2011 Term Chapter 5 #18 a. Lauren Yost & Co. should use the b. Lauren Yost & Co. should use the nonnegligent performance defense. They should argue that they performed the audit in accordance with auditing standards, and that not uncovering the inventory scam doesn't make the responsible for the scam. c. She is likely to be successful in her legal defenses. Based solely on the information provided, the audit was performed correctly. The firm did all that can be deemed reasonable to perform an accurate audit. Stuart Supply Company has to have an internal controls system in place that will eliminate things like this in the future. I think the court will find that Stuart Supply Company is to blame for their loss. d. I don't think the outcome would have been any different. They performed the audit correctly and did attempt to deceive anyone. #19 Yes, the CPA firm could be liable to the creditors. Small's performance could be considered grossly negligent. That is key, because normally the firm wouldn't be liable to a third party that it isn't dealing with. But, because of the gross negligence, there could be constructive fraud, and fraud is the exception
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This note was uploaded on 09/21/2011 for the course ACC 411 taught by Professor Bilker during the Spring '11 term at Edison State College.

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Written Assignment 2 - Dustin Taylor Written Assignment 2...

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