Smith & Jones Rendered an Unmodified Auditor's Opinion on the Financial

question 8

Multiple Choice

Smith & Jones rendered an unmodified auditor's opinion on the financial report of a company that sold shares in a public offering. Based on a false statement in the financial report, Smith & Jones is being sued by an investor
Who purchased shares in this public offering. Which of the following represents a viable defence?

• A) The investor has not met the burden of proving fraud or negligence by Smith & Jones.
• B) The false statement is immaterial in the overall context of the financial report.
• C) Detection of the false statement by Smith & Jones occurred after the date of the auditor's report.
• D) The investor did not actually rely upon the false statement.

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Definitions:

Coercive Power

The ability of an individual or group to compel or control actions of others through the threat of punishment or the implementation of sanctions.

Informational Power

Influence over others derived from the possession or access to valuable information.

Milgram

Refers to Stanley Milgram, a psychologist known for his experiment on obedience, demonstrating how far individuals would go to obey an authority figure.

Authoritarian Persons

Authoritarian Persons possess a personality type characterized by strict obedience to authority, favoring order and structure over personal freedom.