- 15 Marks
AAA – Nov 2013 – L3 – SB – Q6 – Auditor’s Legal Liability
Discuss criminal charges against accountants, reasons auditors prefer out-of-court settlements, and the disadvantages of such settlements.
Question
Auditors’ liabilities may arise under common law and statute. Statutory liability may be civil or criminal. Professional accountants are increasingly guiding against incidences of litigation that may impact negatively on their work.
You are required to:
(a) Outline SIX ways through which accountants may be charged for criminal offenses. (6 Marks)
(b) Explain SIX reasons why auditors are willing to settle legal matters with their clients out of court. (6 Marks)
(c) State THREE disadvantages of an out-of-court settlement. (3 Marks)
(Total: 15 Marks)
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