Time left 1:14:26 Question 31 Not yet answered Points out of 10.00 P Flag question ABACI, Inc. is a small accounting firm which has generally had a strong reputation for the quality of its auditing services. Despite a growing demand for those capabilities, ABACI has typically avoided bringing on additional staff, which has left its auditors stretched rather thin. Recently, a former client of ABACI, Trade International (TI), made news when it fired its CFO for embezzling funds. A full investigation revealed that the embezzlement had been going on for five years. Notably, ABACI had conducted an audit for TI eighteen months ago and failed to discover it. There is a lot of talk that 'ABACI must not have been following GAAS standards since its audit did not turn up the theft'. TI comes to you for helps and asks: 1) First, and primarily, whether they might prevail in a suit of negligence against ABACI? They are quite keen on knowing whether the facts support such a legal determination. So please explain the issue well. 2) Second, and related to the standard addressed, they note to you that this in a state that abides by the Ultramares Doctrine. They are curious whether that is relevant in your analysis of their case? 1 X A B I $ Time left 1:14:26 Question 31 Not yet answered Points out of 10.00 P Flag question ABACI, Inc. is a small accounting firm which has generally had a strong reputation for the quality of its auditing services. Despite a growing demand for those capabilities, ABACI has typically avoided bringing on additional staff, which has left its auditors stretched rather thin. Recently, a former client of ABACI, Trade International (TI), made news when it fired its CFO for embezzling funds. A full investigation revealed that the embezzlement had been going on for five years. Notably, ABACI had conducted an audit for TI eighteen months ago and failed to discover it. There is a lot of talk that 'ABACI must not have been following GAAS standards since its audit did not turn up the theft'. TI comes to you for helps and asks: 1) First, and primarily, whether they might prevail in a suit of negligence against ABACI? They are quite keen on knowing whether the facts support such a legal determination. So please explain the issue well. 2) Second, and related to the standard addressed, they note to you that this in a state that abides by the Ultramares Doctrine. They are curious whether that is relevant in your analysis of their case? 1 X A B I $
