AQ053-3-2-AAD INDIVIDUAL ASSIGNMENT Page 1 of 3

INSTRUCTIONS:

(a) This assignment is an individual assignment and is worth 30% of your total assessment.

(b) Your assignment must be type written using font Times New Roman size 12, 1.5 spacing,
justified alignment, 1 inch margin on both sides of each page and properly bound.

(c) Cover page of assignment must include NAME, STUDENT ID, SUBJECT CODE,
LECTURER’S NAME and DATE of SUBMISSION.

(d) You must make at least 10 references to a combination of indexed journals, industry/
practitioner articles and regulatory publications. Please use an APA Referencing Format.

(e) The assignment is to be submitted as a single written report and word limit 3,000 words (+/-
10%)

(f) The case study should be well-structured and the use of proper paragraphs for topic separation is
encouraged. Good flow of information is expected.

(g) You are required to submit your case study via Online submission in Moodle, into the intake
specific folder “Individual Assignment” by due date (28/9/2023)

(h) Cases of plagiarism will be penalized.

APU Level 2 Asia Pacific University of Technology & Innovation 20230901

AQ053-3-2-AAD INDIVIDUAL ASSIGNMENT Page 2 of 3

ANSWER ALL QUESTIONS

THE CHANGING LANDSCAPE OF AUDITORS LIABILITY

Auditors’ liability is a double-edged sword: although litigation risk is a powerful incentive for audit
firms to provide high-quality audits (DeFond and Zhang 2014), they fear that large litigation costs
threaten their very survival (Levitt and Nicolaisen 2008). For example, Laventhol & Horwath, the
seventh-largest audit firm at the time, went bankrupt in 1990 because of costly lawsuits. Litigation costs
are still thought to remain high today, as evidenced by the Center for Audit Quality’s estimate that
lawsuits cost audit firms roughly 15 percent of their annual revenue (Center for Audit Quality 2008).
Indeed, concern about high litigation costs was a factor that led the US Treasury secretary to institute the
Advisory Committee on the Auditing Profession in 2008. The committee was asked to opine, among
other things, on the sustainability of the public company auditing profession in the presence of
significant litigation risk and whether to limit liability of audit firms (Levitt and Nicolaisen 2008).
Recent statistics shows there is evidence that shareholder litigation against auditors has declined
in recent years. The number of lawsuits has decreased, dismissals have increased,1 and auditors’
settlement payouts have fallen (both in terms of dollar value and as a percentage of the total settlement
value paid by all defendants). One explanation is that litigation against auditors has declined because
audit quality has improved.
(Extracted from https://www.journals.uchicago.edu/doi/abs/10.1086/707238)

REQUIRED: -

In the context of Professional liability of Auditors, explain the scope of criminal and civil offences in
any specific area of fraudulent exercise. In your discussion, do include how professional accountants
and auditors may be protected from criminal and civil liability. Provide specific situations, case
examples to support your discussion points. You are also advised to relate your findings from articles,
journals and current announcements from professional bodies and industries.

(GRAND TOTAL: 100 marks)

APU Level 2 Asia Pacific University of Technology & Innovation 20230901

AQ053-3-2-AAD INDIVIDUAL ASSIGNMENT Page 3 of 3

Overall Grading Criteria

Grade Description of performance level

80% - 100% There were mature and interesting points based on your research and reading. Each
point supported with valid explanation. Shows understanding of subject matter.
Adequate reference given. No grammatical errors or spelling mistakes.

60% - 79% There were sufficient points raised with valid explanation provided. There is adequate
understanding of subject matter. Minor grammatical errors and spelling mistakes.

40% - 59% No clear understanding of research subject. Insufficient points given and explanations
are unclear or not helpful in clarifying points. Not enough reference given. Major
grammatical and spelling mistakes.

Below 40% You did not display any understanding of the subject matter. Points are off-topic and
do not tie back to research. No understanding of theories and concepts taught. Not
enough reference given. Numerous grammatical and spelling mistakes.

END OF ASSIGNMENT QUESTION

APU Level 2 Asia Pacific University of Technology & Innovation 20230901