(a) Auditors and accountants can minimize their potential liability in a number of ways:

-Periodic rotation of audit engagement partner

-Prohibit certain non-audit services for public company audit clients

-Restrict of the non-audit services for audit clients

-Audit firm Policies

(Explain and give relevant examples for each point)

(b) There are other actions that firms can take to ensure quality and minimize liability exposure including:

(a)Issuing engagement letters;

(b)Making appropriate client acceptance/continuance decisions;

(c)Evaluating the audit firm's limitations

(d)Maintaining high-quality audit documentation

(e)Other-control programs: AOB perform quality reviews of registered public accounting firms

(Explain and give relevant examples for each point)

(c) Compare and further explain an auditor's liability to third parties for negligence under Ultramares, Credit Alliance, 1965 Restatement (Second) of Torts and Rosenblum. Then indicate which approach you think auditors prefer and why? Which approach do you think is best for society? Why?

(d) A breach of contract occurs when an auditor fails to perform a contractual duty. Breach actions included (1) violating client confidentiality (2) failing to provide the audit report on time (3) failing to discover a material error or employee fraud and (4) withdrawing from an audit engagement without justification. As a result of the breach, parties to the contract can file suit.

Further explain (1), (2), and (3) in more words for each.