This website uses cookies to ensure you have the best experience. Learn more

Due Professional Care And Due Diligence

516 words - 3 pages


The legal risks faced by the CPA profession are ever so present today in our capitalist society. When CPAs and CPA firms execute an engagement for an auditing client, they know well that risk they exposed themselves to significant liability should their report conclusion and recommendations cause monetary damages. This liability does not only extend to direct customers. There is also a risk posed by third parties that at the time of the engagement the CPA or firm had no knowledge of. Common laws have various forms of negligence that the CPA profession has to defend itself against. The statutory laws add the additional liability of criminal proceedings against the CPAs and the CPA firms who find themselves as defendants. The ...view middle of the document...

The Ultramares v. Touche & Co. case of 1931 is a great example of the inherent risks of the CPA profession. Even though that Touche & Co. audit services would be used to obtain financing, they did not know who ultimately would be financing Fred Stern & Company. The New York State Appeals Court, for failing to see the deliberate misrepresentations on the company’s account receivable, upheld the gross negligent ruling that was given to Tuche & Co..
Another unique case was the ZZZZ Best Co. in the 1980’s. The thought that the Ponzi scheme would have been exposed earlier if a physical site inspection of the services performed were conducted even though enough information and documentation suggested that is was unwarranted.
In conclusion, the legal risks of the CPA profession are always on the mind of the CPA firm. These cases specifically bring to light the nature of due professional care and due diligence. Whether being uncertain as to how clients use an auditors report or realizing parties go to great lengths to cover up fraud, nothing is always as it seems. That is why independence is crucial and must have an unbiased approach. PCAOB will to continue to monitor public CPA firms and AICPA continues to improve best practices, this “grey” area which continues to put CPAs and firms in positions of liability and constantly defending themselves.

Associated Bibliography

Whittington, R & Pany, K (2012). Principles of Auditing & Other Assurance Services. New York, NY: McGraw-Hill.

Chatfield, M (2013, January, 2). Ultramares Corporation v. Touche. retrieved September, 21 2013, from Wikipedia Web Site:

Knapp, M ZZZZ Best Company, Inc.. (n.d) retrieved September 21, 2013, from Rohan Chambers Web Site:

Other assignments on Due Professional Care And Due Diligence

Professional Values And Ethics Essay

499 words - 2 pages action along your career path. Professional values are simply the foundation of your career. These values sometimes alter after some time and during various events of life and as your central foundation of belief, should remain the same. Usually, your professional values are the off-shoots of the things you care about in your personal life; things such as: truthfulness, working as a team and “doing the right thing”. Say for instance, a

Money Laundering In Football Essay

1049 words - 5 pages Action Task Force (‘FATF’) (an independent inter-governmental body that develops and promotes policies to protect the global financial system against money laundering and terrorist financing). Indeed TI has suggested that, ”Vulnerabilities in the sector's financing and due diligence practices, culture and structure are seen…as creating an environment conducive to money laundering by organised crime.“ The concerns have been compounded by two

Lessons From Bearing Case

1026 words - 5 pages controls that will be needed when undertaking new business ventures. * External: ensure F/S is showing a true and fair view, by collecting necessary evidences; instead of collecting, they only rely on documentation provided by the bank; should have b more independent; lack of professional ethics; in key area, when know that gearing is high, should have due diligence; lack of professional skepticism To ensure the financial report has no

Security Policy & Standard, Task 2

1741 words - 7 pages the case of HBWC it is clear that the As-is-state did not have any improvement process. The lack of a security plan or improvement process has made HBWC’s current systems vulnerable to a great number of threats. The establishment of a comprehensive ISMS policy and the adoption of the PDCA process will greatly reduce the risk of threats and vulnerabilities of HBWC, and it users. Due diligence requirements establish very clear legal ramification for

A Situation In Which A Nurse Can Be Held Liable For Negligence

1020 words - 5 pages . The nurse will thus be liable or accountable in tort if the medical wrong or harm happens because he or she does not possess or use their nursing care skills, knowledge, and diligence to avoid the circumstance. The gravity of such a case can cause the death of a pregnant mother, the fetus or both, which are punishable offenses by law as professional negligence. Ways to proactively avoid or prevent negligence in nursing A nurse working in a

Instructions Needed

1911 words - 8 pages |Begin working on the Professional Career Action Plan due in Week Four. | | | |Learning Team Instructions |Review the Week Two objectives and discuss additional insights and questions that may have |Due by Sunday. |2.5 | | |arisen. Participate in the Learning Team Deliverable Question posted in the main forum

Delima Case Study

1132 words - 5 pages power by the management and breach fiduciary on the part of the director. Under Section 132(1) of the Companies Act 1965 state that a director of a company shall at all time exercise reasonable care, skill and diligence. Director who are appointed as an agent of a company have a fiduciary duties towards the company which include duty to act bona fide in the interest of the Company, duty to avoid conflict of interest and duty to act for the

Real Estate Appriasla Research Paper

315 words - 2 pages . The study confirms valuations impact from an earlier study at a range of 3.1% to 26% depending on multiple factors. This is crucial for appraisals to be aware of when there doing their due diligence for an appraisal. I also believe it is vital to homeowners to be aware when moving into these communities. If I’m ever working with a buyer in one of the communities, as an agent, I think I would also advise my client of the implication I learned from this study. Received Full credit for this paper! Reference: Kilpatrick, John (2015). Animal Operations and Residential Property Values. Appraisal Journal, 83.1, Pg.41

Aicpa Code Of Professional Conduct

417 words - 2 pages Independence, Due Care, and Scope and Nature of Services. Each of these principles is meant to be followed by the members of the AICPA. These articles are used to explain the responsibilities that CPA’s have to clients, colleagues and to the public. The first principle, Responsibilities, protects the public of irresponsible and immoral behavior. The Public Interest makes sure the public’s best interest is protected. The third and fourth

Ipad Technology Workplace

1538 words - 7 pages surveyed who had interacted with pharmaceutical sales representatives with iPads, 35 percent said they were more likely to request a sample and 29 percent said they were more likely to consider prescribing the drug. Generally speaking, companies typically identify a problem or a business process that needs enhancement and then perform due diligence and an in-depth technology assessment to choose IT to apply to that situation. Historically, this is

Norton Lilly

996 words - 4 pages performance gaps. Burton then established key performance indicators that identified operating level objectives for each process. This helped managers focus their attention on the performance of value-creating processes and allowed the company to become more discipline. Jim Burton decided it was best to change various policies. The capital outlay policy required all projects be considered after satisfactory due diligence was performed. Burton

Similar Documents

Due Process And Crime Control Essay

2336 words - 10 pages and federal level, the Court sent a clear signal to law enforcement and criminal justice officials. Convictions not made in conformity with the “fairness” standard would likely be overturned. Constitutional guarantees of due process for the accused had to be upheld. The Court heard a number of similar cases at the same time that it heard Miranda. The Miranda decision distilled the several “fundamental fairness” standards into one succinct

Information Security Essay

253 words - 2 pages diligence different from due care? Why are both important? When organizations adopt levels of security for a legal defense, they may need to show that they have done what any prudent organization would do in similar circumstances. This is referred to as a standard of due care. Due diligence is the demonstration that the organization is diligent in ensuring that the implemented standards continue to provide the required level of protection. 5. (Whitman & Mattord, 2011, p. 114) What is a policy? How is it different from a law? 6. (Whitman & Mattord, 2011, p. 114) What is the best method for preventing an illegal or unethical activity?

Business Essay

306 words - 2 pages PATTON – FULLER COMMUNITY HOSPITAL HR Mission Statement To develop, establish and maintain policies and programs that ensure the successful recruitment, employment and retention of a diverse, well qualified workforce to serve the patients. Overview The Human Resources Department is responsible for the recruitment, selection, classification, compensation, benefits, professional development, employee relations, legal compliance and record

Corporate Compliance Essay

506 words - 3 pages minutes. Board members should be aware that their absence from a meeting of the board does not relieve them from their duty of care, obedience, loyalty. After each board meeting: Board meeting minutes should be written and distributed immediately. You are required to retain the board meeting minutes with your business records and update them annually. The following compliance mechanism correspond to each of the "7 steps" towards due