An Example of Auditor Legal Liability to Third Parties Under

question 22

True/False

An example of auditor legal liability to third parties under common law would be the federal government prosecuting an auditor for knowingly issuing an incorrect audit report.

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Definitions:

Clear

To finalize or settle a transaction or an obligation, especially in the context of financial transactions.

Disbursement Float

The time difference between the issuance of a payment and when the funds are actually debited from the payer’s account.

Cheques

A written, dated, and signed instrument that contains an unconditional order directing a bank to pay a definite sum of money to a payee.

Deposit

A sum of money placed or kept in a bank account, often to gain interest.