Analyze each of the following situations below and provide your assessment of the potential resolution of each scenario, including potential liability for the auditor or audit firm involved.

1. Yasmeen CPA is a defendant in a lawsuit alleging that she should be held liable for gross negligence for a fraud involving the valuation of securities included in the financial statements of one of his clients. Yasmeen was uncertain how to establish a correct valuation for the securities and decided to rely on the price estimation supplied by management.

2. A lawsuit has been filed against Elena CPA, charging her with constructive fraud in the audit of Broughton Companys financial statements. Elena has examined all the audit documentation in his files and reviewed all relevant auditing standards. She is convinced that his audit fully complies with standards of the profession but is uncertain what he should use as his primary defense tactic.

3. Canon Film filed for a bankruptcy in January 2012. A recent blog suggested that Canons external auditors should be sued for failing to qualify the firms opinion on the financial statements issued before the bankruptcy, even though the fair presentation of the financial statements is not being disputed.