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Unformatted text preview: Auditor exercise of due diligence Lack of auditor intent to defraud Contributory negligence by management c. The creditors of an aerospace concern that has defaulted on its secured debt file suit against the accounting firm that performed a review and some tax work for it. Chapter 17: P6 d. The shareholders of a large retail drug store chain file suit against the auditors when it comes to light that the managers have been embezzling large amounts of money from the company treasury. The audit firm had substantially complied with professional standards in its audit but the managers had colluded in such a way that detection of such a fraud would have been difficult in any circumstances. No responsibility to plaintiff Lack of reliance by the plaintiff Auditor exercise of due diligence Lack of auditor intent to defraud Contributory negligence by management...
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- Fall '08