Responsibilities of Auditors under Private Securities Litigation Reform Act

Question 1

Auditor should report criminal activity to

Answer 1

the Audit Committee or the Board of Directors

Question 2

What is an Auditor required to establish under Private Securities Litigation Reform Act

Answer 2

1) Evaluate Firm’s ability as a going concern
2) Identify material Related Party Transactions
3) Detect Material Illegal Acts

Question 3

What does The Private Securities Litigation Reform Act do?

Answer 3

Amends the Federal Securities Act of 1933 and Federal Securities Exchange Act of 1934 (common and preferred secutiries)

Question 4

Under Private Securities Litigation Reform Act when should the SEC be informed

Answer 4

After the Audit Committee or the Board of Directors was initially informed and no action is taken

Question 5

Damages Under Private Securities Litigation Reform Act

Answer 5

is based on proportionate fault of the liability if unknowingly known