Ethical Obligations and Decision-Making in Accounting 2nd Edition by Steven Mintz, Roselyn Morris

Exercise 18

Explain the “safe harbor” provision in the PSLRA and how it establishes the auditor’s legal liability with respect to forward-looking information?

Step 1 of 2

Audit:

The audit is defined as a systematic examination of books of accounts of an individual or an organization.

Auditor:

Auditing is done by the professional CPA; we call them auditors. At the end of the accounting period when all the books of accounts are closed, an auditor ensures all the entries recorded in the books of accounts are accurate as required in the law.

According to the AICPA Code of Professional Conduct, as per CPA or auditor should not work for his gain. He should work with a high sense of integrity and know what is right and just. As per the auditor, he should be an independent person from the client, and his objective should be not getting close to a client with strives to maintain public confidence in this profession.