Business Finance Homework Help. Virginia Commonwealth University Accounting Legal Liabilities for Auditors Discussion
For this assignment, we will use the same case we used for last week’s LGR assignment to discuss potential legal liabilities the auditor may face in the situation.
Your Tasks:
First, read the rest of the case of Cook and Thomas, LLC. Cook and Thomas, LLC. – Alternative Formats from page 21 to the end. Address the following questions in a MS Word document (Note: For this assignment, I don’t expect you to write complete sentences and paragraphs. Use the bullet points and lists as much as possible so that it is easier to read and grade the assignment; The length of the write-up does not affect the grade as long as you address all questions; Properly cite the sources you used in your write-up)First, assume that the auditor did not inform Paple Lumber Supply and Front Porch Furniture of Fine Furniture Manufacturing’s going concern opinion prior to the release of the audit report. The case explains the potential lawsuits that the auditor may face in this situation. Explain the differences between the lawsuit brought by the 1) stockholders of either company (Paper Lumber or Front Porch) vs. 2) Mutual Trust Bank. Specifically;a. what type of third party is each plaintiff (the list is on page 9 of Module C slides)? and b. which party is more likely to be recover their loss from the auditor through the lawsuit? Explain your answer for full credit.Now, assume that the first situation above did not happen and the auditor informed Paple Lumber Supply and Front Porch Furniture of Fine Furniture Manufacturing’s going concern opinion prior to the release of the audit report.In this case, Fine Furniture Manufacturing is likely to sue the auditor. Which law is applicable to this case? (Common law for auditors’ liability to clients, common law for auditors’ liability to third parties, Securities Act of 1933, or Securities Exchange Act of 1934?)Based on what you learned in Module C about the list of things the plaintiff must prove in a lawsuit against the auditor, explain what Fine Furniture Manufacturing has to show to the court in this situation (Note: Don’t merely copy and paste the list from the slides but apply what you learned to this specific situation. If the case does not provide you with all the facts you need to answer this question, you are allowed to make some assumptions).
