Legal Liability – Page 2

AAA – Nov 2013 – L3 – A – Q7 – Auditor’s Legal Liability

This question tests understanding of actions that could result in criminal liability for an auditor.

Question

An auditor will be criminally liable if he engages in the following, EXCEPT
A. Aiding a client to devise or execute crime
B. Agreeing with a client to conceal or destroy vital evidence
C. Advising a client to commit a criminal offence
D. Advising a client on steps to minimize tax liability taking advantage of the law
E. Assisting the client to commit an offence relating to money laundering

Answer

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Tags: Auditor Responsibilities, Criminal Liability, Ethics, Legal Liability
Level: Level 3

Topic: Auditor’s Legal Liability
Series: NOV 2012

AAA – Nov 2012 – L3 – SB – Q6 – Auditor’s Legal Liability

This question discusses auditors' responsibilities to shareholders and stakeholders, steps to minimize liability risks, and actions in distressed companies.

Question

In a recent seminar you attended, it was explained that although auditors can incur civil liability under various statutes, it is far more likely that they will incur liability for negligence under common law. The paper presenter mentioned cases against auditors which were in this area. You also learnt that auditors must be fully aware of the extent of their responsibilities, together with steps they must take to minimize the danger claims arising from professional negligence.

Required:
a. Discuss the extent of auditors’ responsibilities to shareholders and other stakeholders during the course of their normal professional engagement. (8 Marks)

b. Outline FIVE steps that audit firms can take to minimize the danger of claims against them. (5 Marks)

c. Itemize TWO steps that must be taken to minimize the danger of claims when the company is deemed to have been distressed. (2 Marks)
(Total 15 Marks)

Answer

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Tags: Audit Firms, Auditor's responsibility, Legal Liability, Professional Negligence
Level: Level 3

Topic: Auditor’s Legal Liability
Series: NOV 2012

AAA – Nov 2012 – L3 – AII – Q12 – Auditor’s Legal Liability

Identifies the type of creditors given priority in payment during a liquidation process.

Question

The creditors given priority payment during a liquidation process are known as …………………. creditors.

Answer

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Tags: Creditors, Insolvency, Legal Liability, Liquidation, Priority Payment
Level: Level 3

Topic: Auditor’s Legal Liability
Series: NOV 2012

AAA – Nov 2012 – L3 – SA – Q18 – Auditor’s Legal Liability

Identifying debtor categories exempt from bankruptcy declaration under Nigerian law.

Question

The following categories of debtors may be declared bankrupt (according to Bankruptcy Law in Nigeria) EXCEPT:

A. A debtor owing a liquidated sum of at least N2,000 (Two Thousand Naira only).
B. A debtor who has committed an act of bankruptcy within 3 months before presentation of bankruptcy petition.
C. Any debtor domiciled in Nigeria or who has carried on business in Nigeria by means of an agent or a manager.
D. A debtor that makes any conveyance or transfer of his property or any part thereof if he were adjudged bankrupt.
E. A debtor who transacts business in Nigeria and is able to meet his obligation as at when they fall due.

Answer

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Tags: Bankruptcy Law, Debtors, Insolvency, Legal Liability, Nigeria Law
Level: Level 3

Topic: Auditor’s Legal Liability
Series: NOV 2012

AAA – May 2024 – L3 – SC – Q5 – Auditor’s Legal Liability

Assess the auditor's legal position and requirements for due care in Globamedia's case, and outline preventive steps.

Question

Globamedia is a company listed on The Nigerian Exchange (NGX) and is a long-established media company. In the last three years, it made some losses, though it is making investment in digital publishing. This investment and the company’s projected sound future prospects have led to a good market rating since it was generally seen that this digital publishing is a leading edge in the media industry. Its investments have been funded through the use of reserves built over many years.

However, a few weeks ago, Globamedia’s shares were suspended, having fallen by more than the stipulated threshold by The Nigerian Exchange Group on rumors that asset values have been significantly overstated and that the company was no longer financially viable. Your firm as the auditors has come under significant criticism and is considered as being negligent.

Required:

a. Evaluate the legal position of your firm. (5 Marks)

b. Discuss the requirements for due care. (5 Marks)

c. Highlight the steps and procedures that the firm could have taken to prevent such a situation from occurring. (5 Marks)

Answer

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Tags: Audit Procedures, Auditor's responsibility, Due care, Financial Viability, Legal Liability, Media Industry, Risk Management
Level: Level 3

Topic: Auditor’s Legal Liability
Series: MAY 2024

BL – Nov 2013 – L1 – SB – Q1b – Agency Law

Advising on employer's liability when an employee causes injury during unauthorized activity.

Question

Anjori Engineering Company Limited has a bus that conveys its staff to work, and employed Okan as the driver of the bus. It is clearly written on the bus that non-staff passengers are not allowed on board. Okan, on his way to work one morning, used the company’s bus to convey non-staff passengers and had an accident with the bus, injuring some of the passengers. Efe, one of the non-staff passengers, threatens to sue Anjori Engineering Company Limited for damages for the injury he suffered as a result of the accident.

You are required to:
Advise Anjori Engineering Company Limited, stating the applicable principle of law.

Answer

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Tags: Employer's Responsibility, Legal Liability, Vicarious Liability
Level: Level 1

Topic: Agency Law
Series: NOV 2013

BL – March July 2020 – L1 – SB – Q3b – Agency Law

Explains the legal consequences of agency transactions involving named and unnamed principals.

Question

Contracts made by an agent with third parties have legal consequences.

Required:
Explain briefly the consequences of the following in an agency transaction:
i. Named Principal (3 Marks)
ii. Unnamed Principal (3 Marks)

Answer

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Tags: Agency Law, Legal Liability, Named Principal, Unnamed Principal
Level: Level 1

Topic: Agency Law
Series: MAR/JULY 2020

BL – March July 2020 – L1 – SB – Q3a – Sale of Goods

Legal advice on breach of contract and actions for a seller against a defaulting buyer under the Sale of Goods Act.

Question

Bature Company Limited is a big manufacturer of a special brand of industrial split-unit air conditioners in the country. The company has a standard contract with all its distributors not to sell air conditioners above ₦200,000 per unit so as to make its products attractive in the market, and each distributor also obtained the same undertaking from their customers.

Katifa Ventures, one of the company’s major distributors, sold 20 units at the agreed price of ₦200,000 to Chinedu Enterprises, who resold each at ₦250,000, even though it also signed the undertaking. Bature Company Limited got to know this and intends to take legal action against Chinedu Enterprises.

Required:
Advise Bature Company Limited, explaining the legal issues involved.

Answer

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Tags: Breach of Contract, Contract Law, Legal Advice, Legal Liability, Sale of Goods
Level: Level 1

Topic: Sale of Goods
Series: MAR/JULY 2020

BL – May 2016 – L1 – SB – Q3c – Employment Law

Advise on the legal rights concerning safety policy compliance and employer liability for injury.

Question

Otegbade & Company Limited, a shoe-producing company, employed Taju as a Cobbler in the factory. The Managing Director of the company ensures that, in line with the health and safety policy of the factory, workers are provided with working tools and safety equipment, including protective glasses, which he always insists workers in the factory must wear during working hours. Taju disregarded the company’s safety policy. In the course of filing the heel of a shoe he was producing yesterday, and while not wearing the protective glasses, plastic particles entered his eyes and have permanently damaged his eyesight. The company denies liability. Taju is threatening to sue the company, and he has come to you for advice.

Required:

Advise Taju on his legal rights in this matter.

Answer

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Tags: Employment Rights, Legal Liability, Safety Compliance
Level: Level 1

Topic: Employment law
Series: MAY 2016

BCL – Nov 2016 – L1 – Q6b – Accounts and Audit

Define professional negligence and its implications in a legal context.

Question

Briefly explain what is meant by professional negligence.

Answer

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Tags: Duty of Care, Ghana, Legal Liability, Professional Negligence
Level: Level 1

Topic: Accounts and audit
Series: NOV 2016

BCL – Nov 2016 – L1 – Q6a – Accounts and Audit

Assess whether Capare Industries Ltd. would be justified in taking legal action against the firm of auditors.

Question

Capare Industries Ltd, which already held shares in a company known as Logotex Co., later made a takeover bid on the strength of its accounts prepared by Dickman Ltd., a firm of auditors. Capare Industries Ltd realized that the accounts were inaccurate in that they showed a pre-tax profit of GH¢1.3 million when in actual fact there had been a loss of GH¢400,000. It was the case of Capare Industries Ltd that if they had known the true situation, they would not have made a bid at the price they did or may not have made a bid at all. They argued that they were owed a duty of care by the auditors as new investors and as existing shareholders who in reliance on the accounts had bought more shares.

Required:
Explain whether Capare Ltd would be justified in taking action against the firm of auditors.

Answer

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Tags: Auditors, Duty of Care, Ghana, Legal Liability, Professional Negligence
Level: Level 1

Topic: Accounts and audit
Series: NOV 2016

BCL – Nov 2015 – L1 – Q4 – Legal Implications Relating to Companies in Difficulty or in Crisis

Discuss the circumstances under which the courts may lift or pierce the veil of incorporation of a limited liability company.

Question

What are the reasons for which the courts are prepared to lift or pierce the ‘veil of incorporation’ of a limited liability company? (20 marks)

Answer

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Tags: Company Law, Corporate Structure, Legal Liability, Veil of Incorporation
Level: Level 1

Topic: Legal implications relating to companies in difficulty or in crisis
Series: NOV 2015

Question Tag: Legal Liability

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AAA – Nov 2013 – L3 – A – Q7 – Auditor’s Legal Liability

This question tests understanding of actions that could result in criminal liability for an auditor.

AAA – Nov 2012 – L3 – SB – Q6 – Auditor’s Legal Liability

This question discusses auditors' responsibilities to shareholders and stakeholders, steps to minimize liability risks, and actions in distressed companies.

AAA – Nov 2012 – L3 – AII – Q12 – Auditor’s Legal Liability

Identifies the type of creditors given priority in payment during a liquidation process.

AAA – Nov 2012 – L3 – SA – Q18 – Auditor’s Legal Liability

Identifying debtor categories exempt from bankruptcy declaration under Nigerian law.

AAA – May 2024 – L3 – SC – Q5 – Auditor’s Legal Liability

Assess the auditor's legal position and requirements for due care in Globamedia's case, and outline preventive steps.

BL – Nov 2013 – L1 – SB – Q1b – Agency Law

Advising on employer's liability when an employee causes injury during unauthorized activity.

BL – March July 2020 – L1 – SB – Q3b – Agency Law

Explains the legal consequences of agency transactions involving named and unnamed principals.

BL – March July 2020 – L1 – SB – Q3a – Sale of Goods

Legal advice on breach of contract and actions for a seller against a defaulting buyer under the Sale of Goods Act.

BL – May 2016 – L1 – SB – Q3c – Employment Law

Advise on the legal rights concerning safety policy compliance and employer liability for injury.

BCL – Nov 2016 – L1 – Q6b – Accounts and Audit

Define professional negligence and its implications in a legal context.

BCL – Nov 2016 – L1 – Q6a – Accounts and Audit

Assess whether Capare Industries Ltd. would be justified in taking legal action against the firm of auditors.

BCL – Nov 2015 – L1 – Q4 – Legal Implications Relating to Companies in Difficulty or in Crisis

Discuss the circumstances under which the courts may lift or pierce the veil of incorporation of a limited liability company.

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AAA – Nov 2013 – L3 – A – Q7 – Auditor’s Legal Liability

This question tests understanding of actions that could result in criminal liability for an auditor.

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AAA – Nov 2012 – L3 – SB – Q6 – Auditor’s Legal Liability

This question discusses auditors' responsibilities to shareholders and stakeholders, steps to minimize liability risks, and actions in distressed companies.

You're reporting an error for "AAA – Nov 2012 – L3 – SB – Q6 – Auditor’s Legal Liability"

AAA – Nov 2012 – L3 – AII – Q12 – Auditor’s Legal Liability

Identifies the type of creditors given priority in payment during a liquidation process.

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AAA – Nov 2012 – L3 – SA – Q18 – Auditor’s Legal Liability

Identifying debtor categories exempt from bankruptcy declaration under Nigerian law.

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AAA – May 2024 – L3 – SC – Q5 – Auditor’s Legal Liability

Assess the auditor's legal position and requirements for due care in Globamedia's case, and outline preventive steps.

You're reporting an error for "AAA – May 2024 – L3 – SC – Q5 – Auditor’s Legal Liability"

BL – Nov 2013 – L1 – SB – Q1b – Agency Law

Advising on employer's liability when an employee causes injury during unauthorized activity.

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BL – March July 2020 – L1 – SB – Q3b – Agency Law

Explains the legal consequences of agency transactions involving named and unnamed principals.

You're reporting an error for "BL – March July 2020 – L1 – SB – Q3b – Agency Law"

BL – March July 2020 – L1 – SB – Q3a – Sale of Goods

Legal advice on breach of contract and actions for a seller against a defaulting buyer under the Sale of Goods Act.

You're reporting an error for "BL – March July 2020 – L1 – SB – Q3a – Sale of Goods"

BL – May 2016 – L1 – SB – Q3c – Employment Law

Advise on the legal rights concerning safety policy compliance and employer liability for injury.

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BCL – Nov 2016 – L1 – Q6b – Accounts and Audit

Define professional negligence and its implications in a legal context.

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BCL – Nov 2016 – L1 – Q6a – Accounts and Audit

Assess whether Capare Industries Ltd. would be justified in taking legal action against the firm of auditors.

You're reporting an error for "BCL – Nov 2016 – L1 – Q6a – Accounts and Audit"

BCL – Nov 2015 – L1 – Q4 – Legal Implications Relating to Companies in Difficulty or in Crisis

Discuss the circumstances under which the courts may lift or pierce the veil of incorporation of a limited liability company.

You're reporting an error for "BCL – Nov 2015 – L1 – Q4 – Legal Implications Relating to Companies in Difficulty or in Crisis"

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