Exam 51: Accountants' Duties and Liability

Pursuant to federal securities laws, an audit must be performed by a CPA who works closely with the company in the capacity of a chief executive officer (CEO)or a chief financial officer (CFO).

In the case of Ultramares Corporation vs.Touche, the defendant was found to be not guilty of negligence due to lack of privity of contract.

A(n)________ is defined as intentional misrepresentation or omission of a material fact that is relied on by the client and causes the client damage.

An auditor's opinion that the company's financial statements fairly represent the company's financial position, the results of its operations, and the change in cash flows for the period under audit, in conformity with generally accepted accounting principles is referred to as a(n)________.

A rule that says that an accountant is liable for negligence to third parties who are projected users of the client's financial statements is known as ________.

A disclaimer of opinion is a clause in auditing that a company can claim wherein the auditor is not allowed to access a high-priority portion of a company's financial records.

Which of the following opinions would an auditor make for a company that, he or she feels, has materially misstated certain items on its financial statements?

Which of the following is the most common type of corporate structure that is used by accounting firms that operate in the U.S.?

Accountants cannot be held criminally liable for material irregularities in financial statements prepared for registration statements.

Accountants can be named as defendants in lawsuits that assert violations of the Racketeer Influenced and Corrupt Organizations Act (RICO).

The Private Securities Litigation Reform Act of 1995 replaced proportionate liability of the defendant with joint and several liability.

The Tax Reform Act of 1976 created the Public Company Accounting Oversight Board (PCAOB).

The Ultramares doctrine provides the broadest standard for holding accountants liable to third parties for negligence.

In which of the following ways can an accountant defeat the imposition of liability under Section 18(a)?

The Securities Act of 1933 requires that before a corporation or another business sells securities to the public, the issuer must file a registration statement with the Securities and Exchange Commission (SEC).

________ imposes civil liability on accountants and others for making misstatements or omissions of material facts in a registration statement, or failing to find such misstatements or omissions.

When does an auditor submit a disclaimer of opinion? What is the significance of an auditor's opinion?

Which of the following rules provides that an accountant is liable only for negligence to third parties who are members of a limited class of intended users of the client's financial statements?

Which of the following is true of an auditor of a corporation?

Why do accountants come under the purview of Section 18(a)of the Securities Exchange Act of 1934?