The Most Significant Audit Issue That Came as a Result

question 14

Multiple Choice

The most significant audit issue that came as a result of the court decision in the Escott et al.v.Bar Chris Construction Corporation case in 1968 was:

• A)the court's reaffirmation that the burden of proof was on the plaintiff to prove the auditor was negligent.
• B)the affirmation of the increased auditor's responsibility when performing an S-1 review, a review of events subsequent to the balance sheet, for registration statements.
• C)the increased auditor responsibility when associated with unaudited financial statements.
• D)the court's refusal to allow the percentage-of-completion method of accounting for revenues.

---

Definitions:

Vroom, Yetton, Jago DECISION-MAKING Model

A situational leadership model that outlines how leaders can make effective decisions by evaluating the importance of the decision, the necessity of quality, and the acceptance of others.

Authority Decisions

relate to choices or judgments made by individuals or bodies holding power or command within an organization.

Manager

An individual responsible for directing, controlling, and administering an organization or group, overseeing tasks, and making decisions.

Confirmation Error

The tendency to seek confirmation for what is already thought to be true and not search for disconfirming information.