if a company has proceedings for fraudulent trading against it. Can an auditor of that company be held to have contributed to such fraudulent activity and are there any defences?
2007-03-17 05:51:25 · 5 answers · asked by beth 1 in Business & Finance ➔ Other - Business & Finance
If the auitor knows of the fraudalent activity and does not report in as stated in the GAAP then yes, they will be charged. However, if the auditor does not see the activity when performing the audit, (money is all accounted for with accurate source documents) then they cannot be held liable. The question would have to be asked as to if there were two ledgers that recorded revenue and expenses. If thats the case and there were two sets and the auditor only had access to one then they are in the clear.
2007-03-17 05:57:16 · answer #1 · answered by whirlwind_123 4 · 0⤊ 0⤋
Yes. You have to audit the auditor/s and provide proof though. If guilty, lay a charge at the police station. You may even lay a charge upon reasonable suspicion of fraud and the police will investigate.
2007-03-17 05:57:53 · answer #2 · answered by Peter V 5 · 0⤊ 0⤋
There are two landmark cases presided over by the famous Judge Cardozo and another one by Wendel Holmes. Cardozo's one especially is very blunt about condoning Accountants of any legal liabilities for their work. His contention is that Accounting is not an exact scinece for them to be made liable for any mistakes they commit in the process of doing their job. You can search for these two cases in Corpus Juris Secundum.
2007-03-17 06:44:26 · answer #3 · answered by Mathew C 5 · 0⤊ 0⤋
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2016-10-02 07:00:53 · answer #4 · answered by gilboy 4 · 0⤊ 0⤋
Normally accounts are audited by an outside agency......
2007-03-17 05:56:40 · answer #5 · answered by Jojotraveller 4 · 0⤊ 0⤋