Simean & Co, a Firm of CPA's, Issued an Unqualified

question 33

Essay

Simean & Co, a firm of CPA's, issued an unqualified audit report for its client, Xiing Manufacturing Corporation, a footwear manufacturer in Asia. Xiing Manufacturing, listed its head office in Toronto, Ontario, and its sharwere traded on a Canadian Stock Exchange. Besidthe shareholders, Simean & Co. knew the company was in the process of refinancing a significant bank loan coming due, and the bank was anxious to see the year end results. After an unqualified audit report was issued, the regulator of the stock exchange halted the trading of the sharafter allegations of management fraud came to light. As a result, the share price plummeted and the company went out of business.
Required:
(a) To whom did Simean & Co. owe a duty of care?
(b) What must the bank demonstrate to establish negligence?
(c) What are the defencavailable to Simean & Co?

Understand the assumptions and conditions necessary for perfect competition.

Identify characteristics and non-characteristics of perfectly competitive markets.

Recognize the role and implications of being a price taker versus a price maker in perfect competition.

Describe the demand curve faced by a perfectly competitive firm.

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Definitions:

Fats

Organic compounds made of fatty acids and glycerol, serving as a major energy storage form in organisms.

Waxes

A diverse class of organic compounds that are malleable at room temperature, typically derived from plants and animals or synthesized industrially.

Oils

Organic compounds that are liquid at room temperature and are hydrophobic, not mixing with water but mixing with other oils and organic solvents.

Carbohydrate

Organic compounds made up of carbon, hydrogen, and oxygen that serve as a major source of energy in the diet of animals, including sugars, starch, and cellulose.