Asked by Jacek Buczko on Apr 28, 2024
Verified
An auditor who accepts a client's explanation regarding financial irregularities, despite contradictory evidence, could be considered grossly negligent.
Grossly Negligent
Refers to a severe lack of care or action that significantly breaches the duty of care owed to another, resulting in substantial harm or risk.
Financial Irregularities
Unusual or improper financial transactions that may indicate mismanagement, fraud, or violations of regulations.
Contradictory Evidence
Information or data that directly opposes or disputes the claims or findings presented in a specific context.
- Familiarize oneself with the concept of liability related to professional services and the particular conditions that render a professional liable for negligence or misconduct.
- Comprehend the legal responsibilities of accountants in detecting and reporting fraud or financial irregularities in a client’s books.
Verified Answer
ZK
Zybrea KnightMay 03, 2024
Final Answer :
True
Explanation :
Accepting a client's explanation for financial irregularities without proper scrutiny, especially in the presence of contradictory evidence, can be considered a failure to exercise the due care and diligence expected of an auditor, thus constituting gross negligence.
Learning Objectives
- Familiarize oneself with the concept of liability related to professional services and the particular conditions that render a professional liable for negligence or misconduct.
- Comprehend the legal responsibilities of accountants in detecting and reporting fraud or financial irregularities in a client’s books.