Exam 27: Accountants' Duties and Liability

A(n)________ is an auditor's opinion that the financial statements are fairly represented except for,or subject to,a departure from GAAPs,a change in accounting principles,or a material uncertainty.

Under the foreseeability standard,an accountant is liable even if he or she had no knowledge of the intended user of the audited financial statements.

Third parties usually cannot sue accountants for breach of contract.

Accountants who meet certain educational requirements,pass the CPA examination,and have a certain number of years of auditing experience are called ________.

________ provides that an accountant's work papers cannot be used against his or her client in a court action.

Limited partners are personally liable for the debts and obligations of the limited liability partnership.

________ 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.

Accountants can be held liable for negligence in preparing unaudited financial statements.

________ is a rule that says that an accountant is liable only for negligence to third parties who are in privity of contract or in a privity-like relationship with the accountant.

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

Ordinary negligence by an accountant is not a violation of Section 10(b)and Rule 10b-5 of the Securities Exchange Act of 1934.

________ specify the methods and procedures that are to be used by public accountants when conducting external audits of company financial statements.

Generally Accepted Accounting Principles (GAAPs)specify the methods and procedures that are to be used by public accountants when conducting external audits of company financial statements.

Which of the following standards have most states adopted regarding accountant liability for negligence to third parties?

Which of the following is required to bring a civil action for securities fraud against a violator of RICO?

Which of the following can an accountant use as a defense to liability under Section 11(a)of the Securities Act of 1933?

Most public accounting firms operate as limited liability partnerships (LLPs).

A verification of a company's books and records pursuant to federal securities laws,state laws,and stock exchange rules that must be performed by an independent CPA is known as a(n)________.

Which of the following is true of Section 10A of the Securities Exchange Act of 1934?

________ is a law that prohibits any manipulative or deceptive practice in connection with the purchase or sale of a security.