: 10/2021-01/ For each of the following situations, identify the appropriate source of liability: common law - client, common law - third party, federal statutory law - civil, federal statutory law - criminal. Assume the auditor is Nowland, CPA and the audit client is RST Company, a publicly-held corporation. You might use each source of liability once, more than once, or not at all. hents [Choose] 1. The federal government is prosecuting Nowland for mail fraud. The government claims that Nowland had knowing involvement with false financial statements. The financial statements, along with the audit report, were sent through the US postal service. 8 of [Choose e Page 2. The stockholders of RST sue Nowland. The stockholders claim that Nowland made an untrue statement of a material fact relating to the financial statements. oster Choose! 3. RST's bank sues Nowland. Nowland knew that this bank would be using the financial statements for loan purposes. The bank claims that Nowland did not find a material fraud at ABC, a fraud in which a significant amount of inventory was stolen. Because of this inventory theft, XYZ did not have adequate collateral for the loan to the bank. Ultimately, the bank was not able to collect any of the loan owed by RST. The bank is claiming damages, in the amount of the unpaid loan fraud at ABC, a fraud in which a significant amount of inventory was stolen. Because of this inventory theft. XYZ did not have adequate collateral for the loan to the bank. Ultimately, the bank was not able to collect any of the loan owed by RST. The bank is claiming damages, in the amount of the unpaid loan. [Choose ] 4. RST sues Nowland. RST claims that Nowland did not discover an embezzlement of cash by its controller, who was able to steal $5,000,000. This loss has caused RST to have serious cash flow problems. Question 3 20 pts For each of the following four situations, decide whether or not the auditor has violated professional ethics. (See the list of the Rules of Conduct in problem 1). (1) State which rule of ir violation or not. and (3) Briefly explain why there is or is : 10/2021-01/ For each of the following situations, identify the appropriate source of liability: common law - client, common law - third party, federal statutory law - civil, federal statutory law - criminal. Assume the auditor is Nowland, CPA and the audit client is RST Company, a publicly-held corporation. You might use each source of liability once, more than once, or not at all. hents [Choose] 1. The federal government is prosecuting Nowland for mail fraud. The government claims that Nowland had knowing involvement with false financial statements. The financial statements, along with the audit report, were sent through the US postal service. 8 of [Choose e Page 2. The stockholders of RST sue Nowland. The stockholders claim that Nowland made an untrue statement of a material fact relating to the financial statements. oster Choose! 3. RST's bank sues Nowland. Nowland knew that this bank would be using the financial statements for loan purposes. The bank claims that Nowland did not find a material fraud at ABC, a fraud in which a significant amount of inventory was stolen. Because of this inventory theft, XYZ did not have adequate collateral for the loan to the bank. Ultimately, the bank was not able to collect any of the loan owed by RST. The bank is claiming damages, in the amount of the unpaid loan fraud at ABC, a fraud in which a significant amount of inventory was stolen. Because of this inventory theft. XYZ did not have adequate collateral for the loan to the bank. Ultimately, the bank was not able to collect any of the loan owed by RST. The bank is claiming damages, in the amount of the unpaid loan. [Choose ] 4. RST sues Nowland. RST claims that Nowland did not discover an embezzlement of cash by its controller, who was able to steal $5,000,000. This loss has caused RST to have serious cash flow problems. Question 3 20 pts For each of the following four situations, decide whether or not the auditor has violated professional ethics. (See the list of the Rules of Conduct in problem 1). (1) State which rule of ir violation or not. and (3) Briefly explain why there is or is