Author Question: Paul Lewis, forensic accountant, has been engaged by a claimant, Ovizone Company to access the ... (Read 141 times)

tth · **on:** Jul 6, 2018

Paul Lewis, forensic accountant, has been engaged by a claimant, Ovizone Company to access the financial loss suffered due to acquisition of Skinet Corp and testify it in the form of a report.

Ovizone claims that the acquisition occurred only because of the negligent business valuation made by Trufinance Company. Halfway through the engagement, Lewis realized that Ovizone suffered loss due to Trufinance's negligence in valuation. But, Lewis had very limited technical knowledge in business valuation. Which of the following AICPA Rules of Professional Conduct should Lewis focus on while rendering his testifying report?
A) Integrity and objectivity - Rule 102
B) Independence - Rule 101
C) General Standards - Rule 201
D) The public trust - Rule 203

Question 2

Write a brief note on standard of proof.

What will be an ideal response?

sarajane1989 · **Reply #1 on:** Jul 6, 2018

Answer to Question 1

C
Explanation: C) General Standards - Rule 201 as Lewis appears to be lacking professional competence to perform the business valuation.

Answer to Question 2

The presumption of innocence must be overcome by a certain standard of proof, which describes the amount of evidence the plaintiff must present to prove its case. In a civil case, the requisite standard is a preponderance of the evidence-more likely than not (>50 probability). Some civil cases (such as civil fraud) must be proven by clear and convincing evidence. Clear and convincing is greater than preponderance, but no specific percentage can be assigned. In a criminal case, the prosecution has a legal obligation to prove all elements of an alleged offense (such as fraud, tax evasion, or murder) beyond a reasonable doubt. Again, no percentage can be assigned. The applicable burden and standard of proof are explained to the jury by the judge and included in the jury instructions. The forensic accountant must understand the requisite standard of proof for any litigation engagement and articulate his or her opinion accordingly.