The Litigation Reform Act of 1995 requires that an audit include procedures designed to guarantee that illegal acts that would materially affect financial statements will be detected.

Question

Quizplus · Accepted Answer

The Litigation Reform Act of 1995 does not specifically require audits to include procedures designed to guarantee the detection of illegal acts that would materially affect financial statements. Instead, the act primarily addresses securities litigation reforms. Audit requirements are more directly governed by auditing standards and regulations, such as those from the Public Company Accounting Oversight Board (PCAOB) and the American Institute of Certified Public Accountants (AICPA), which do require auditors to consider the risk of material misstatement in financial statements due to fraud or error, including certain illegal acts.

The Litigation Reform Act of 1995 Requires That an Audit