TASK Background You are an audit manager at Oscar Edwards Vance (OEV), an accounting firm with offices throughout regional Australia in major centres such as Bathurst, Goulburn, Coffs Harbour and...

1 answer below »

TASK Background You are an audit manager at Oscar Edwards Vance (OEV), an accounting firm with offices throughout regional Australia in major centres such as Bathurst, Goulburn, Coffs Harbour and Armidale in NSW, Warwick in Queensland and Bendigo in Victoria. OEV is a medium-sized auditing firm by national standards and most of its clients operate within the manufacturing and service industries.  During early July 2019, you met with the audit senior of OEV, Jack Higgins, to discuss a range of findings related to various clients of OEV. Framed Ltd Framed Ltd was a wholesaler of office supplies that sold its products to retailers throughout NSW. Framed had only been breaking even for the last two financial years, with the management of cash flow being a significant issue. Despite the cash flow issues (Framed was often close to the limit on its bank overdraft) revenue had been reasonable. Receivables and payables however, had been creeping up. OEV completed their most recent audit and provided an unmodified opinion. Within a couple of months of year-end, Framed went into liquidation as it was unable to meet its debts. The liquidator of Framed subsequently discovered a major fraud carried out by two sales representatives of Framed who had been entering falsified sales in order to achieve their sales bonuses. Jack tells you that the audit work on sales and receivables was done by Neville, a junior member of the audit division and that sales and receivables had been materially overstated. Jack informs you that the liquidator of Framed is pursuing damages from OEV, claiming negligent conduct for not detecting the fraud. Jack also informs you that VicBank had extended the terms of their overdraft to Framed by relying on the audited financial statements and that they too are pursuing OEV for damages for negligence. Switch Pty Ltd Jack then tells you he has been working on the audit of Switch Pty Ltd under the supervision of his audit manager, Bruce. During the audit, Jack discovered a material cut-off error which caused revenue to be materially overstated. Jack reminds you that the policy of OEV is to document any material adjustment in the working papers, with the final determination being made by the senior audit partner. Jack also informs you that from his earlier discussions he knows that the management of Switch does not want to make any adjustments. Jack says that when they finished off the fieldwork, Bruce told Jack not to mention the adjustment in the working papers. Bruce said that Switch only has a small number of shareholders, that he knows from experience the audit partner won’t want to upset an important client and that they really need to finish things off as soon as possible in order to meet deadlines. Required Question 1 (5%) Based on the information provided by Jack in relation to Framed Ltd, and making reference to specific common law and/or auditing standards, prepare a report which addresses the following: · An outline of all the elements of the tort of negligence; · Whether the liquidators of Framed are likely to succeed in their action against OEV; · Whether OEV can reduce their liability to the liquidators of Framed; and · Whether VicBank is likely to succeed in their action against OEV. Question 2 (5%) Making reference to the Code of Ethics for Professional Accountants, advise Jack as to what he should do in response to the information he has provided regarding the audit of Switch Ltd. Use the following American Accounting Association (AAA) Model template to guide your response. American Accounting Association Model Decision-making process 1. Determine the facts The facts are ... 2. Define the ethical issues 3. Identify the major principles, rules, and values 4. Specify the alternatives 5. Compare values and alternatives 6. Assess the consequences 7. Make your decision Online submission via Turnitin is required for this assignment. Details will be provided by your subject lecturer. RATIONALE SUBJECT LEARNING OUTCOMES This assessment task will work towards assessing the following learning outcome/s: · be able to explain and critically evaluate influences on audit and assurance services including: Australian and international professional standards, statutory and common laws, regulatory bodies, and public expectations within a global market. · be able to exercise critical and reflective judgement and appreciate the PRESENTATION Assessment tasks should be submitted on Turnitin as a Microsoft Word document. Do not submit as a PDF document. · The first page should contain your name, student number, subject code, word count and due date. Please use 12 point font and avoid the use of fancy templates with added colour or graphics. · Lines should be double spaced. · The assessment tasks should be within +/- 10% of the word limit. The word count is taken from the first word to the last word and includes quotes. Quotes must comprise less than 10% of the total word count. · Proof-read your work so that it is free of spelling, grammar, and punctuation mistakes. Use language that is appropriate for academic and professional tasks. Ensure you use respectful and appropriate terminology. For assistance, see Learning Skills: http://www.csu.edu.au/division/studserv/learning · Your reference list should contain all source documents that you refer to, quote or paraphrase from. It must conform to the APA referencing style: https://www.csu.edu.au/current-students/learning-resources/build-your-skills/academic-skills-help/referencing
Answered Same DayMar 19, 2021ACC568Charles Sturt University

Answer To: TASK Background You are an audit manager at Oscar Edwards Vance (OEV), an accounting firm with...

Khushboo answered on Mar 22 2021
114 Votes
Solution 1:
The law of tort can be categorized with the main four objectives such as protection of the genuine interests, providing of the compensation when such interests are trespassed, next is the establishment of the normative standards of the behavior and providing those
who have suffered impairment with some form of reprisal. The legitimate interests which are recognized by the law of tort are the integrity of the person, property and of reputation. This can be understood with the help of example such as interest in land are protected by the tot of nuisance and trespass to land, reputation is protected by the tort of defamation and the integrity of the person is protected by the tort of trespass to the person (Hartman, Dennis).
There are various elements of the law of negligence such as duty of care, breach of duty, causation and injury. The responsibility of overhaul must always be available in any entitlement if it is to be successful and it states that there should be duty of care on part of the person that must be upheld. In other words, there exists some responsibility of care and legal accountability that needs to be followed and when they breach this care either intentional or unintentional then the person will be liable for the tort. The next element is the causation which results in suffering and this is crucial part for the tort case as there is need for the action that has caused suffering to the victim and in the absence of cause, there will be no case for the tort. The last element is the damage or injury and it is also crucial part as without any damage or injury there will be no lawsuit. Thus it is important for these damages are proven for the legitimate case (Jean Murray 2019).
In the given case the liquidators of Framed has pursued the damages from OEV being negligent in conducting the audit and not detecting the fraud. Auditor is having the legal duties attached to their activities and the breach of such duty due to careless act constitutes negligence. In other words, negligence is established when deeds were uncaring and there was an affiliation between the harm and deeds (Richard Curd & Keira Hare 2008). The negligence statement provided by the auditor of the company can result in the pure economic loss. It is the duty of the auditor to provide a guarantee to the users that there is no material fraud and it is true and accurate and there are no anomalies. The erroneous audit opinion is considered as audit failure and auditors are held responsible and can be charged on the breach of legal duty. In the case of Hedley Byrne and Co. versus Heller and Partners in 1963 establishment recovers the damages as a result of reliance on negligent misrepresentation. Similarly in the given case there was...

Answer To This Question Is Available To Download

Related Questions & Answers

More Questions »

Submit New Assignment

Copy and Paste Your Assignment Here