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Auditing-Chapter 20
Auditing. Chapter Twenty. Legal Liability.
11
Accounting
Undergraduate 4
05/09/2014

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Term
Due Professional Care
Definition
A legal standard requiring that the auditor perform his or her professional services with the same degree of skill, knowledge, and judgment posessed by other members of the same profession.
Term
Engagement Letter
Definition
A letter that formalizes the contract between the auditor and the client and outlines the responsibilities of both parties.
Term
Generally Accepted Auditing Standards
Definition
Measures of the quality of the auditor's performance.
Term
Gross Negligence
Definition
An extreme, flagrant, or reckless departure from professional standards of due care.
Term
Joint and Several Liability
Definition
The auditor can be responsible for the entire loss even if other parties contributed to the loss.
Term
Ordinary Negligence
Definition
An absence of reasonable or due care in the conduct of an engagement.
Term
Privity
Definition
A party's contractual or fiduciary relationship with the accountant.
Term
Professional Skepticism
Definition
An attitude that includes a questioning mind and a critical assessment of audit evidence. The auditor should not assume that management is either honest or dishonest.
Term
Reasonable Assurance
Definition
A term that implies some risk that a material misstatement could be present in the financial statements without the auditor detecting it.
Term
Scienter
Definition
Acting with intent to deceive, defraud, or with knowledge of a false representation.
Term
Tort
Definition
A wrongful act other than a breach of contract for which civil action may be taken.
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