Introduction and Purpose of Assignment
Any professional – someone who assumes a responsibility to the public – is required to provide a reasonable level of care in the performance of their work. Typically the baseline for professional performance is what the law allows and prohibits. This assignment applies the legal requirements placed on auditors to a marketplace scenario.
- Determine the legal responsibility of an auditor. (1.4)
Theory and Context
Auditors have a responsibility to fulfill both implied and expressed contracts with clients. This includes exercising due care in performing the audit. The auditor also has a duty of care to third parties whose reliance on the auditor’s work should be (and can be) “foreseen” by the auditors. The Securities Act of 1933, the Securities Act of 1934, and the Sarbanes-Oxley Act provide the basis regarding the legal responsibilities of auditors.
Rutgers accounting web. (2015). Four major sources of auditors’ legal liability [Video file]. Retrieved from https://www.youtube.com/watch?v=NKwR0ifABSY
- Review the Research and Discussion Case 4-42 on page 142.
You are a partner in the Denver office of a national public accounting firm. During the audit of Mountain Resources, you learn that this audit client is negotiating to sell some of its unproved oil and gas properties to SuperFund, a large investment company. SuperFund is an audit client of your New York office.
Mountain Resources acquired these properties several ye