Textbook Notes (362,734)
United States (204,197)
Business (2)
Eric Dies (2)
Chapter 46

Business Law Chapter 46 Notes

3 Pages
Unlock Document

New York University
BUSN1-UC 544
Eric Dies

Business Law II - Monday, August 12th notes Chapter 46 - accountant’s responsibility Regulation ofAccountants Private Sector ->AICPA-> Technical & Ethical standards (relationship between accountant and client) CPA-> Client -> 3rd Party -> Financial statements required for 3rd party to loan to client. 3rd party will not accept any unaudited financial statements because of fraud chance. … 3rd party will require CPA, the independent 3rd party to audit the financial statements and express an opinion on it. … Accounting firm has to be competent and sign off on it. CPAfirm can’t be dependent on the client, ethical issue. -> can’t invest on client. -> CPAfirm can’t accept gifts from client *unless it’s minor* … or it will lose appearance of being independent Separation between client & CPAfirm must exist. If 3rd party feels CPAfirm isn’t independent, 3rd party won’t accept the financial statements. Maintaining independence = key to professional life of auditing … competency must be possessed by cpa firm Public Sector (government/state) - Federal Government -> SEC & IRS If there’s fraud in CPAfirms, they will be held accountable. Accountant-Client Relationship (privilege) -Accountant-client privilege is not like attorney-client privilege. The key difference is accountant must disclose if subpoenaed by the court - to testify. However, sharing the personal information with others isn’t allowed. Accounting firm -Audit department -> certified audits (express opinions) in accordance to GAAS and GAAP - Tax department (planning, tax return/review) - Consulting Plan effects of the tax ahead of time so you can have effective decisions (planning tax department). - what are the effects of the deal? - can’t go back and undo things after deal is made. Clean opinion / unqualified opinion (means everything’s okay) … Financial statements are fairly presented does not equal exact Not receiving exact, but not materially off. No material errors. Accountant has to follow GAAS standards, doesn’t matter if fraud is found, regular auditors aren’t accountable for finding fraud. If, following GAAS there is fraud - auditor must report it. If auditor skips GAAS steps and there was fraud, CPAfirm could be liable. Tax- Shelters -> Millions of dollars not being payed to government in taxes * investors will throw off losses -> wealthy investors * some kind of business behind the deal Tax evasion - illegal act that is not okay, unreported income, not paying taxes. Tax avoidance - is okay, using tax rules to your benefit. *** court found this whole this is a sham, tax-shelters are not in the spirit of the law. Court decided not to shut down accounting firm because the ramifications would be huge. Thousands of employees / clients lost. (KPMG) Liability ofAccountant Under Common Law 1) Breach of contract -> Engagement letter (services to be performed, fees) … everyone signs off on it between firm and client. Breach has to be because of accountant’s negligence, accountant can’t be held liable because of the client’s ne
More Less

Related notes for BUSN1-UC 544

Log In


Don't have an account?

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.