Exam 47: Professional Liability and Accountability

Gift Company's liabilities exceed its assets. Gift hires Hill & Dale, an accounting firm, to prepare a balance sheet. Through negligent omissions, the sheet shows a net worth. Invest Bank relies on it to make a loan to Gift. When the firm defaults, the bank files a suit against Hill & Dale. Under the Restatement (Third) of Torts, Hill & Dale is most likely​

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

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

An accountant cannot be held liable for a misstatement or omission of material fact in a registration statement.​

Hernando, an accountant, helps Industrial Equipment & Supplies Company prepare and file a false federal corporate income tax return. Under the Internal Revenue Code, this is​

Kiana can be described as "a reasonably competent general practitioner of ordinary skill, experience, and capacity." This is the normal standard for judging the performance of​

In some states, in the absence of privity, a party cannot recover from an accountant for negligence.​

The Sarbanes-Oxley Act applies only to domestic public accounting firms that provide auditing services to "issuers."​

A professional can not be held liable for constructive fraud.​

Traditionally, a professional owed a duty to those with whom the professional had a direct contractual relationship to perform a service and to any third party who relied on that service.​

Penalties for aiding or assisting in the preparation of false tax returns are limited to one penalty per taxpayer per tax year.​

Norman is an accountant. Norman's violation of generally accepted accounting principles and generally accepted auditing standards​