Winston Chang,a PA,conducted the Audit of Manra Manufacturing Ltd

question 7

Multiple Choice

Winston Chang,a PA,conducted the audit of Manra Manufacturing Ltd. ,a small company that produces a variety of machined parts for the automotive and computer industries.The audit showed that the company produced a small profit after paying the owners of the company a high salary.Manra was purchased by a competitor,Cheblay.Cheblay had hoped to produce efficiencies by combining the two companies but was unable to do so.Cheblay sued Chang because it relied upon the financial statements when purchasing the company's shares,claiming that the machines,which were about fifteen years old,had been overvalued.The machines were recorded at cost,which was below net realizable value.What is the auditor's best defence?

• A)contributory negligence
• B)absence of negligence
• C)duty of care
• D)absence of liability

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Definitions:

Earth's Mantle

The part of the earth's interior between the crust and the outer core, composed of silicate rocks that are rich in magnesium and iron.

Lithosphere

The outermost layer of Earth, comprising the crust and the upper mantle, characterized by its solid and rigid properties.

Earth's Volume

The total three-dimensional space occupied by Earth, calculated to be around 1 trillion cubic kilometers.

Nonrenewable Resources

Resources that do not replenish at a sustainable rate compared to their consumption, including fossil fuels and minerals.