Case Study | Auditing | Assignment

Running head: CASE STUDY - AUDITING
CASE STUDY – AUDITING
Name of Student
Name of University
Author’s Note

CASE STUDY - AUDITING
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CASE STUDY - AUDITING
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QUESTION 1:
As per the case study, Oscar Edward Vance is the auditing firm who takes care of the
audit of Framed Ltd. As per the report provided by Jack, that there are several points that Oscar
Edward Vance, the auditor of Framed Ltd failed to identify from their financial report. These
unidentified fraudulences are termed as tort of negligence. The elements of the tort of negligence
are as follows:
 Cash Flow Issue:
As per Jack, who is the senior auditor of Oscar Edward Vance, states that Framed
Ltd. was facing the cash flow issue for last two years. It is highlighted by Jack that the
business entity was facing cash flow management issue. It can be observed that the
disruption in the cash flow statement does not affect the financial statements of the
company (Arens, Elder & Beasley, 2016). It is only possible when the there is a chance
of misstatement.
 Sales:
As per the sales data provided by the company regarding sales in the financial
statements were false. Thus, the sales data in the financial statements were overstated.
As the case study, the liquidator of Framed Ltd. filed a case against the Oscar Edward
Vance, which was the auditing company of Framed Ltd. It is the liquidator who identified the
fraud that was carried out by the sales personnel of Framed Ltd. As per the liquidator the one
who should be blamed is the auditor of the company. As per the liquidator, it is the auditor who
should identify the problem, as they are responsible for overseeing the financial statements of the
company. As per liquidator the auditor of Framed Ltd. failed to achieve that. They failed to