1. From the e-Activity, analyze whether or not investors who were misled by relying on financial statements could hold the audit firm liable for audit failure either by common or security laws. Provide a rationale for your response.
2. According to an article in the CPA Journal, the accounting profession has long contended that an audit conducted in accordance with generally accepted auditing standards (GAAS) provides a reasonable assurance that there are no material misstatements contained within financial statements. Suggest at least two (2) alternative methods that auditors can use to provide a more concrete level of assurance to investors. Provide support for your response with examples of such methods in use.
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