Provide a recent example of a criminal liability against a CPA firm. What happened and what was the result?
Livent v Deloitte & Touche LLP
The receiver of Livent, a publicly-traded live theatre production company, brought a claim against Livent's auditors for failure to discover a fraud being perpetrated at the direction of Livent's former CEO and CFO, with the assistance of its accounting and IT departments and to the knowledge of most of Livent's audit committee. Livent hid its unprofitability through accounting manipulations, assisted by computer software it had designed to carry out these manipulations without a trace. After a change in management, Livent's accounting staff confessed and the fraud was discovered.
The court came to the conclusion that certain of the audit engagements were not performed in accordance with Canadian GAAS. It dismissed the auditor's argument that the fraud was in fact that of the company on whose behalf the claim was being brought, preventing the company from seeking redress from the auditors who failed to discover its own fraud (the ex turpi causa argument). In doing so, the court distinguished Canadian case law on the point. For the same reason, it also rejected arguments of Livent's contributory negligence.
A first in Canada, the court effectively allowed the receiver to claim for "deepening insolvency", i.e. an increase in liabilities of an already-insolvent company. In the result, it allowed "stakeholders" of the company to indirectly recuperate amounts from the auditor through the receiver's claim that they would have been unable to claim directly. The court also refused to give effect to bar orders resulting from the 2003 settlements of US class action complaints by noteholders and shareholders of Livent against the auditors on the basis that the receiver's claim was not brought on their behalf, although they might be the ultimate beneficiaries of the judgment. The auditor has appealed and Livent's receiver has filed a cross-appeal.
Provide a recent example of a criminal liability against a CPA firm. What happened and what...
Provide an example of when you had a communication problem; what happened as a result of the communication problem? What can be learned from the situation and be applied to your own interdisciplinary team nursing communication in the future? (400 words)
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Brienne has worked for a local CPA firm for about five years. She would like to start her own photography business but needs to continue to work as a CPA to cover her living expenses and the start-up costs for her photography business. The CPA firm has offered to let Brienne work as a part-time employee. She can work during the fall and spring advising clients and preparing returns, and then focus on her photography business in the winter and...
An accounting intern for a local CPA firm was reviewing the financial statements of a client in the electronics industry. The intern noticed that the client used the FIFO method of determining ending inventory and cost of goods sold. When she asked a colleague why the firm used FIFO instead of LIFO, she was told that the client used FIFO to minimize its income tax liability. This response puzzled the intern because she thought that LIFO would minimize income tax...
What was the reputation of the Arthur Andersen CPA firm in the 1960s and 1970s?
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