FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 42: Professional Liability and Accountability

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 1

True/False

Review LaterAdd Note

Review Later

The Public Company Accounting Oversight Board oversees the audit of public companies subject to securities laws in order to protect public investors.

A) True
B) False

Correct Answer

verified

Show Answer

Question 2

True/False

Review LaterAdd Note

Review Later

To avoid liability for securities violations, an accountant must use due diligence in preparing a financial statement included in a registration statement-merely asking questions of a corporate officer or director meets this standard.

A) True
B) False

Correct Answer

verified

Show Answer

Question 3

Essay

Review LaterAdd Note

Miriam is an accountant. Natalie is an attorney. Which professional is most restricted from disclosing her or his client's communication?

Norm is an accountant. With respect to an allegation of negligence by Online Retail Inc., one of Norm's clients, Norm's violation of generally accepted accounting principles and generally accepted auditing standards

Reed prepares federal corporate income tax returns for Shopping Mall Inc. and other firms. Under the Internal Revenue Code, with respect to an understatement of a client's tax liability, Reed may be liable for

An accountant who fails to perform for a client as agreed has breached their contract, and the client has the right to pursue a claim for damages.

Commerce Bank files a suit against Drake, its former accountant, alleging constructive fraud. Drake may be held liable

Gen & Hetty is a Registered Public Accounting Firm. The firm performs auditing services for Healthcare Company. Under the Sarbanes-Oxley Act, at the same time, for the same company, Gen & Hetty can also perform

In some states, a party can recover from an accountant for negligence only outside an accountant-client relationship.

Ezra, an accountant, intentionally misstates a material fact to mislead Fruit Packing Inc., a client. Fruit Packing justifiably relies on the misstatement to its detriment. Ezra is most likely liable for

Finola, a certified public accountant, provides accounting services to Global Trade Corporation. The services include preparing Global Trade's financial reports and issuing opinion letters based on the reports. In 2014, Global Trade falls into serious financial trouble, but neither Finola's reports nor her opinion letters indicate this situation. Relying on Finola's portrayal of Global Trade's financial situation, the firm borrows a large sum of money to build a new shipping facility. In lending Global Trade the money, Harbor City Bank relies on Finola's opinion letter. Finola is aware of this reliance. If Finola did not engage in intentional fraud but was negligent, what is her potential liability?

An attorney's commission of a crime constitutes professional misconduct even absent proof that it reflects adversely on the person's fitness as a lawyer.

Rand, an accountant, includes a false statement in a report for Social Media Inc. that is filed with the Securities and Exchange Commission. When Teo buys stock in Social Media and loses money on the investment, he files a suit against Rand, alleging fraud under the 1934 Securities Exchange Act. To avoid liability, Rand can show that he

In some states, an accountant is potentially liable to any user who relies on the professional's statement or report whether or not the reliance was foreseeable.

In most states, accountants are subject to liability for negligence not only to their clients but also to foreseen or known users of the accountants' reports.

Bee is an accountant whose clients include Concessions Inc. If Bee is negligent in her work for Concessions, most courts would hold her liable to the client and

Frye, an accountant, intentionally misstates a material fact to mislead Global Industries Inc., a client. Global justifiably relies on the misstatement to its detriment. Frye is most likely liable for

Bell, an accountant, enters into a contract to provide services to Consumer Staples Inc. Bell fails to meet a regulatory deadline for the work. Required to pay a fine, the company files a suit against Bell. Most likely, the court will order

To hold a professional liable for negligence, a plaintiff must show that a duty of care existed and it was breached-proof of an injury is not required.

Galen prepares a financial statement for Hobby Inc. before a public offering of its stock. The Securities and Exchange Commission orders a revision of the statement. During the subsequent delay of the offering, the stock price drops. Hobby files a suit against Galen for negligence. Galen's best defense is