Exam 43: Accountants Legal Liability

Sara holds 1,000 shares of stock in Starr, Inc., which she purchased based upon financial statements that Travis had prepared. She now realizes that the statements were false and wants to sue Travis for common law fraud. What is Travis's best defense?

Shirley, who is a CPA, fails to discover a fairly obvious error in the books of her client, Banana Computers. If Ben relies on Shirley 's certification of the financial statement in deciding to accept the position of president of the company, Shirley will:

Martin agrees to perform an audit within 30 days, knowing that time is of the essence. After the 30 days, Martin has only performed 60% of the audit. Martin has materially breached his contract.

An accountant may not disclose the contents of his working papers under any circumstances.

Which of the following is correct with respect to the accountant-client privilege?

An accountant is generally held to be the owner of the working papers he uses in performing an audit.

Anna has a contract to perform accounting services for Intercend Corporation. She breaches her contract in a nonmaterial way. Which of the following is correct with respect to Anna's liability?

An accountant's records, including the data-gathering process followed and the information and conclusions drawn therefrom, are known as:

Criminal sanctions for accountants are limited to punitive fines.