Week 5 Assingments from the Readings

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ACC/497 4-15 Identify five other ways in which the Private Securities Reform Act of 1995 will potentially change auditors' legal liability. Explain how each is of potential benefit to the auditor. 1. The Private Securities Reform Act of 1995 requires that who bring up frivolous or unnecessary law suits to pay the attorney’s fees of the defendant. This is beneficial because gives the auditor relief from legal fees over law suits that are found to be in their favor. 2. The Reform Act also provides an stay of discovering while a motion to dismiss is waiting for approval. This also helps auditors delay paying for unessacary legal fees. 3. The Reform Act eliminates securities fraud as a reason for racketeering. This provides treble damages for the auditor. 4. The Reform Act limits third party rights to sue to only five times. This helps the auditor avoid multiple or endless lawsuits. 5. The Reform Act changed how the court appoints lead plaintiffs, this was done in favor of institutional investors whom likely have the greatest financial risk. This helps the auditor by preventing those with minimal financial risk rushing to the courts to press a suit and having the advantage over the larger entity. 4-17 1) Identify how the Sarbanes-Oxley Act of 2002 changed the audit environment for auditors. The Sarbanes-Oxley Act of 2002 changed the audit environment for auditors by reducing the amount of services an auditor can offer a client. The SOX makes it illegal to perform the following services for an audit client: * Bookkeeping or recordkeeping services * Creation or use of financial information systems * Appraisal services * Actuarial services * Internal audit outsourcing services * Human resources or management tasks * Investment advising or investment banking services * Legal services * Expert

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