Exam 24: Accountants' Liability

The accounting firm of Griggs,Macon,and Fiurre audits the financial records of Chasse Co.The Sarbanes-Oxley Act prohibits the accounting firm from providing consulting services to Chasse on human resource matters.

Which of the following is not a provision of the Sarbanes-Oxley Act of 2002?

Halbeck,LLC was negligent in its audit of E-treme,Inc.Unbeknownst to Halbeck,E-treme used the financial statements to secure a loan from Great State Bank. -Under the foreseeable doctrine,Halbeck will be liable to Great State Bank for its losses on the loan.

The IRS files criminal charges against Rich for evasion of federal taxes.Rich's accountant,Sonya,is summoned to appear in court to testify against Rich.The state where the incident occurred recognizes an accountant-client privilege.Does Sonya have to testify in federal court against her client?

Teresa is suing her accountant for fraud.To win,Teresa must show that she justifiably relied on the accountant's fraudulent statement.

What is the downside of using IFRS?

An auditor can be held liable to a third party for:

Larry is a certified public accountant in a firm which audits public companies.Larry is accused of unethical conduct.Is Larry required to abide by the ethical standards of the Public Company Accounting Oversight Board?

Who owns and controls an accountant's working papers?

An auditor for Ralco Accounting firm was auditing the financial statements of E-prise.The auditor suspected that E-prise was engaged in conduct that violated FCPA,a federal law.Under Section 10A of the 1934 Act,the auditor is required to notify E-prise's board of directors of the suspicions.

Accountants must follow GAAP but not GAAS.

GBH,an accounting firm,was hired to prepare financial statements for E-treme. -GBH:

In Ellis v Grant Thornton:

Ralco was preparing Heidi's tax return.In confidence,Heidi revealed some information to Ralco.Under the federal accountant-client privilege,the information Heidi disclosed is protected from disclosure in a criminal action by the U.S.government.

If a plaintiff is successful in proving that an auditor has violated Section 10(b)of the 1934 Act,the auditor has:

Adam claimed that N & A,its accounting firm,negligently prepared an audit.To hold the accounting firm liable,which of the following elements must be established?

After completing an audit,the most unfavorable opinion an auditor can issue is a disclaimer of opinion.

BGH Accounting firm audited the financial statements that were included in E-prise's registration statement.The financial statements overstated sales by 2000%.In conducting the audit,BGH did not comply with generally accepted auditing standards (GAAS).Under Section 11 of the 1933 Act,BGH is liable for any material misstatement in the financial statements.

An auditor who determines a company is materially misstating certain items on its financial statements should issue:

Great State Bank claimed that Wiles Accounting committed fraud in the preparation of an audit.To hold the accounting firm liable,which of the following elements must be established?