BU477 Chapter Notes - Chapter 3: Audit Risk, Legal Liability, Accountant
Document Summary
The number of lawsuits and sizes of awards to plaintiffs remain high, including suits involving third parties under both common law and the provincial securities act. Audit failure: a situation in which the auditor issues an erroneous audit opinion as the result of an underlying failure to comply with the requirements of generally accepted auditing standards. Due care: completing the audit with care, diligence and skill. Business failure: the situation when a business is unable to repay its lenders or meet the expectations of its investors because of economic or business conditions. Audit risk: the risk that the auditor will conclude that the financial statements are fairly stated and an unqualified opinion can therefore be issued when, in fact, they are materially misstated. Expectations gap: the gap between public expectations of the auditor"s role and responsibilities and the auditor"s responsibilities per gaas.
