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on the spirit of the law instead of just regarding technical compliance with the rules. In this case, for example, Enron's SPE, the manager may have succeeded in pressuring auditors to accept the deceptive financial reporting by pointing to the bright-line standard. However, the principles-based standard would require auditors to evaluate the situation of the company as a whole in order to determine whether the company did not have significant exposure in relation to the unconsolidated SPE.

The dangers in removing the bright-line rule is in some situation will involve human judgment and discretion. Auditors may rationalize aggressive financial decisions. They will defend themselves when questioned by asseverate that the accounting standard did not prohibit their action.

Enron and Andersen suffered severe consequences because of their perceived lack of integrity and damaged reputations. In fact, some people believe the fall of Enron occurred because of a form of 'run on the bank.' Some argue that Andersen experienced a similar 'run on the bank' as many top clients quickly dropped the firm in the wake of Enron's collapse. Is the 'run on the bank' analogy valid for both firms? Why or why not?
The run on the bank analogy is valid for both firms. Both of the firms are loss of confidence and credibility of investors and clients. Enron can avoid the bankruptcy if its customers willing to continue to use its services. The debt and obligations of the company are large but it also had large profit. The customers were not willing to use its services when Enron loss its credibility. Besides that, Andersen also can survive if Enron issue had been isolated. Andersen was a large and multinational firm. If it just loss of one client, Enron, it would not go to the end of the firm. However, once the Enron issue occurred, the clients of Andersen were loss of confidence in the firm's credibility. As the result, many clients of Andersen had fired the firm as an external auditor of their company.

Coopers & Lybrand was sued under both federal statutory and state common law. The judge ruled that under Pennsylvania law the plaintiffs were not primary beneficiaries. Pennsylvania follows the legal precedent inherent in the Ultramares Case. (a) In jurisdictions following the Ultramares doctrine, under what conditions can auditors be held liable under common law to third parties who are not primary beneficiaries? (b) How do jurisdictions that follow the legal precedent inherent in the Rusch Factors case differ from jurisdictions following Ultramares?

According to Ultramares cases, only the third parties who are primary beneficiaries can sue for ordinary negligence successfully. However, the third party who did not primary beneficiaries and did not have privity of contract also can successfully sue for gross negligence, recklessness and fraud. In this case, the creditors of Phar-Mor were not considered as primary beneficiaries. 

Therefore the creditors of Phar-Mor were needed to prove there had recklessness or fraud. Besides that, U.S. federal securities laws had required that recklessness needed be prove by a preponderance of the evidence, the Pennsylvania state common law had required prove by a clear and persuasive standard.

According to Rusch Factors case, it had been broadened the Ultramares doctrine by allowed reco本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。