scholarly journals Auditors’ Liability for Failure to Detect Fraud: Lessons Learned from Recent American Case Law

2021 ◽  
pp. 19-28
Author(s):  
Stephen Errol Blythe, Ph.D., Ph.D, J.D.
Keyword(s):  
Case Law ◽  
Legal Liability ◽  
Lessons Learned ◽  
Financial Statement ◽  
Audit Report ◽  
Securities Fraud ◽  
Publicly Traded ◽  
Financial Statement Audit ◽  
Client Firm ◽  
American Case

Auditors are occasionally sued for their failure to detect fraud in the client firm during an audit. These lawsuits are typically grounded in professional negligence, negligent misrepresentation, fraud, aiding and abetting fraud, or federal securities fraud. The PCAOB recently promulgated AS 2401, “Consideration of Fraud in a Financial Statement Audit,” which contains fraud-related Generally Accepted Auditing Standards (GAAS) applicable to audits of publicly-traded entities. An auditor’s failure to comply with GAAS may be evidence of professional negligence. U.S. states are divided as to whether an auditor’s averment of compliance with GAAS in an audit report is a statement of opinion or a statement of fact. An auditor’s failure to investigate evidence indicating potential fraud is one factor used to determine an auditor’s legal liability. An auditor may be able to use the doctrine of in pari delicto as a defense if the plaintiff is also a wrongdoer.

scholarly journals ANALISIS OPINI AUDIT TERHADAP KINERJA ORGANISASI

2018 ◽  
Vol 9 (1) ◽  
pp. 104-115
Author(s):  
Sunarmin Sunarmin
Keyword(s):  
Significant Influence ◽  
Financial Statements ◽  
Financial Statement ◽  
Audit Report ◽  
Non Profit ◽  
Audit Opinion ◽  
Community Institution ◽  
Financial Statement Audit ◽  
Public Company ◽  
Government Institution

Financial Statement Audit is an audit conducted by an independent auditor of the financial statements presented by his client to express an opinion on the fairness of the financial statements. The audit report is a formal medium used by the auditor to communicate to interested parties about the conclusions of the audited financial statements. In issuing the audit report, the auditor must comply with the 4 reporting standards set forth in the generally accepted auditing standards.This analysis is a review of several sources, including from manuals, published studies, legislation published by state organizers as well as some information from media news. This analysis is much related to the phenomenon that has become a source of news in June 2017 and related to the role, function and benefits of the opinion audit conducted by external audit of the organization, both non-profit objectives and expanded to profit organizations. This analysis aims to be more convincing whether there is a significant influence on audit opinion on organizational performance.The result of this analysis can be concluded that, the existence of audit opinion from result of examination conducted by independent accountant, apparently have a very significant influence to the good performance for non-profit organization (government institution, community institution), or profit organization (public company).

Additional Evidence on Audit Report Lag

2001 ◽  
Vol 20 (1) ◽  
pp. 137-146 ◽  
Author(s):  
W. Robert Knechel ◽  
Jeff L. Payne
Keyword(s):  
Earnings Quality ◽  
Financial Statements ◽  
Financial Statement ◽  
Fiscal Year ◽  
Sources Of Information ◽  
Audit Report ◽  
The Public ◽  
Time Period ◽  
Audit Team ◽  
Available Information

The process for providing accounting information to the public has not changed much in the last century even though the extent of disclosure has increased signifi-cantly. Sundem et al. (1996) suggest that the primary benefit of audited financial statements may not be decision usefulness but the discipline imposed by timely confirmation of previously available information. In general, the value of information from the audited financial statement will decline as the audit report lag (the time period between a company's fiscal year end and the date of the audit report) increases since competitively oriented users may obtain substitute sources of information. Furthermore, the literature on earnings quality and earnings management suggests that unexpected reporting delays may be associated with lower quality information. The purpose of this paper is to extend our understanding about the determinants of audit report lag using a proprietary database containing 226 audit engagements from an international public accounting firm. We examine three previously uninvestigated audit firm factors that potentially influence audit report lag and are controllable by the auditor: (1) incremental audit effort (e.g., hours), (2) the resource allocation of audit team effort measured by rank (partner, manager, or staff), and (3) the provision of nonaudit services (MAS and tax). The results indicate that incremental audit effort, the presence of contentious tax issues, and the use of less experienced audit staff are positively correlated with audit report lag. Further, audit report lag is decreased by the potential synergistic relationship between MAS and audit services.

The Doctrines of Specification and Accession: Potential Bases for Legal Ownership through Labor?

1983 ◽  
Vol 4 (1) ◽  
pp. 1-17
Author(s):  
Melissa A. Barker
Keyword(s):  
Case Law ◽  
Dominant Mode ◽  
Legal Basis ◽  
Collective Ownership ◽  
Legal Relationship ◽  
American Case ◽  
Ownership Rights ◽  
Mode Of Production ◽  
Composition Of Products ◽  
Means Of Production

This paper explores the viability of the doctrines of accession and specification as potential sources of a historical-legal basis for ownership rights accruing to labor by recognizing its unique capacity to create value. Focusing on examples from American case law, the origin and development of these doctrines are documented. The changes in these doctrines, from their first appearance in the early civil law or Code of Justinian to the present, often reflect the historic changes in the composition of products, the legal relationship between labor and capital and the changes in the dominant mode of production. The purpose of this inquiry is to determine if a legal rationale exists which justifies collective ownership of the means of production.

scholarly journals British-American Case Law and the Application in Vietnam

2020 ◽  
Vol 36 (4) ◽  
Author(s):  
Nguyen Dang Dung
Keyword(s):  
Legal System ◽  
Case Law ◽  
American Case ◽  
American Legal System

The paper analyzes some characteristics and advantages of the source of the Bristish-American legal system and earned experiences for Vietnam.

scholarly journals Corporate Foreign Corrupt Practices and Director Liability

2014 ◽  
Vol 51 (3) ◽  
pp. 555
Author(s):  
Paul Blyschak
Keyword(s):  
Risk Mitigation ◽  
Civil Liability ◽  
Case Law ◽  
Corporate Law ◽  
Mitigation Strategies ◽  
Public Officials ◽  
Risk Mitigation Strategies ◽  
American Case ◽  
Director Liability

This article examines the various forms of potential liability faced by directors in their capacity as such in connection with corrupt practices engaged in by the corporations they serve. Although generally little discussed to date, Canadian directors do face potential civil liability associated with contraventions of the Corruption of Foreign Public Officials Act that are particular to their status as directors of a corporation. This article thus highlights this particular area of corporate law by reviewing both Canadian jurisprudence and American case law to decipher what lessons Canadian directors can learn in the absence of Canadian precedent similarly on point. Several key cases are highlighted and various risk mitigation strategies available to Canadian directors to guard against these potential liabilities are also discussed.

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