Auditors' Legal Liability and Audit Risk

There continues to be significant growth in litigation claims that have expanded throughout most segments of society. In particular, most major professions have seen increases in claims at an exponential level. Doctors, lawyers, architects and accountants have all experienced the threat of a lawsuit from a client or third party, whether frivolous or not.

This course provides an overview of the business environment's overall effect on the risks auditors face and gives tips on general audit approaches when first examining a prospective or continuing client's overall health. Special attention is given to the types of transactions that lack economic substance and therefore present risk.

There are common pitfalls that plague accountants, and this course provides insight into knowing what to watch for and what to do about it.

The course explains actions that can be taken to minimize the risk of being sued, from evaluating a client for an initial engagement or in deciding whether to continue a current engagement or take on subsequent work.

Legal issues and specific accounting risks are described and analyzed so that an auditor or other accountant can keep top of mind the top areas for focusing attention before and during an engagement.

Learning Objectives:

After completing this course successfully, you should be able to:

• recognize common criticisms of auditors who do not detect fraud
• pinpoint ratios useful in analysis of key business areas in a volatile business climate
• identify transactions that lack economic substance
• identify common pitfalls for accountants
• pinpoint actions that accountants can take to minimize the risk of being sued
• distinguish factors to consider in whether to enter into or continue a client relationship
• determine privity of contract issues in accountants working on different engagement types
• recognize specific accounting risks (e.g., liquidity risk, receivable collectability risk, etc.)