Accountants can be held liable for any misstatements or inaccuracies that occurred while auditing or preparing financial
Posted: Tue Apr 26, 2022 10:01 am
Accountants can be held liable for any misstatements or
inaccuracies that occurred while auditing or preparing financial
documents. Discuss the type of professional liability that might be
incurred by the accounting entity found in one of the following
scenarios: Peter Partner (an accountant) signs a contract to audit
the books of Icy Ice Cream, LLC, a chain of ice cream shops. The
CEO of Icy Ice Cream and Peter Partner agreed that the audit would
be complete by May 31, one week before a deadline to file the
audited documents with the IRS. Mr. Partner missed the filing
deadline and Icy was fined by the IRS for missing the deadline. Big
Corporation, Inc. (BCI) is a Fortune 500 company with publicly
traded stocks, which means that its securities-related activities
are subject to regulation by the SEC, subject to the Securities Act
of 1933. BCI hired Andy Audy, CPA, to prepare financial statements
that it must file, subject to the act. The members of BCI’s board
of directors provided Mr. Audy with the corporate documents
required to prepare the financial statements. Under time pressure,
Mr. Audy did not review all the documents he received. He submitted
statements to the SEC and a week later BCI received a notice from
the SEC informing them that they would be fined for failing to file
accurate financial statements. Bitsy Coen decided to sell her
shares in a bitcoin company. It was her first time interacting with
the SEC so she hired Stan Stocky, CPA, to file the required Notice
of Proposed sale form with the SEC. Bitsy told Stan that she wanted
to use an inflated value of the shares because bitcoin share prices
were rising so fast that she didn’t want to miss out on any profit
between when the form was filed and the sale. Stan filed the form
using the inflated value that Bitsy gave him.
inaccuracies that occurred while auditing or preparing financial
documents. Discuss the type of professional liability that might be
incurred by the accounting entity found in one of the following
scenarios: Peter Partner (an accountant) signs a contract to audit
the books of Icy Ice Cream, LLC, a chain of ice cream shops. The
CEO of Icy Ice Cream and Peter Partner agreed that the audit would
be complete by May 31, one week before a deadline to file the
audited documents with the IRS. Mr. Partner missed the filing
deadline and Icy was fined by the IRS for missing the deadline. Big
Corporation, Inc. (BCI) is a Fortune 500 company with publicly
traded stocks, which means that its securities-related activities
are subject to regulation by the SEC, subject to the Securities Act
of 1933. BCI hired Andy Audy, CPA, to prepare financial statements
that it must file, subject to the act. The members of BCI’s board
of directors provided Mr. Audy with the corporate documents
required to prepare the financial statements. Under time pressure,
Mr. Audy did not review all the documents he received. He submitted
statements to the SEC and a week later BCI received a notice from
the SEC informing them that they would be fined for failing to file
accurate financial statements. Bitsy Coen decided to sell her
shares in a bitcoin company. It was her first time interacting with
the SEC so she hired Stan Stocky, CPA, to file the required Notice
of Proposed sale form with the SEC. Bitsy told Stan that she wanted
to use an inflated value of the shares because bitcoin share prices
were rising so fast that she didn’t want to miss out on any profit
between when the form was filed and the sale. Stan filed the form
using the inflated value that Bitsy gave him.