Description
Section 401 of the Sarbanes-Oxley Act requires that each financial statement to be filed with the SEC should reflect all material correcting adjustments. How does this requirement relate to the auditors’ legal liability for reporting illegal acts? What are the procedures to be followed by an auditor upon discovering that the client has committed an illegal act? .
What are the legal requirements for a third party to sue an auditor under Section 10 and Rule 10b-5 of the Securities Exchange Act of 1934? How do these requirements relate to the Hochfelder decision?

Explanation & Answer

View attached explanation and answer. Let me know if you have any questions.
Running Head: ACT
1
Act
Name
Course
Date of Submission
ACT
2
The Sarbanes-Oxley Act's section 401 mandates that all material adjustments noted by
the auditor be reflected in the issuer's financial records, implying that there should be no material
"unadjusted difference" ("Final Rule: Strengthening the Commission's Requirements Regarding
Auditor Independence; Rel. Nos. 33-8183, 34-47265; 35-27642; ...
