Jackson was a junior staff member of an accounting firm. He began the audit of the Bosco Corporation which manufactured and sold expensive watches. In the middle of the audit, he quit. The accounting firm hired another -.. son ts continue the audit of Bosco. Due to the changeover and the time pressure to finish the audit, the firm violated certain generally accepted auditing standards when they did not follow adequate procedures with respect to the physical inventory. Had the proper procedures been used during the examination they would have discovered that watches worth more than \(\$ 20,000\) were missing. The employee who was stealing the watches was able to steal an additional \(\$ 30,000\) worth before the thefts were discovered six months after the completion of the audit.

Required:

Discuss the legal problems of the accounting firm as a result of the above facts.