Material misstatements or omissions in audit reports. Auditors are required to report internal control weaknesses to management.

Question:

Material misstatements or omissions in audit reports. Auditors are required to report internal control weaknesses to management. The auditors however have no responsibility to report internal control weaknesses in the audit report and failing to do so does not constitute a material misstatement or omission.

Required:

A. Using the library, LexisNexis or internet find the case of James G. Monroe and Penelope E. Monroe v. Gary C. Hughes: Thomas R. Hudson and Deloitte & Touché (1994 US App. LEXIS 18003). Summarise the case.

B. List the reasons why the auditing firm was not found guilty of issuing an audit report with a material misstatement or omission.

Audit Report
The audit report is issued by a certified public accountant who is appointed by the shareholders to provide assurance upon the truth and fairness of the financial statements prepared by the managers of the company. Audit report contains the...