Exam 51: Accountants Duties and Liability

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.

Violations of generally accepted accounting principles (GAAPs)or generally accepted auditing standards (GAASs),or International Financial Reporting Standards (IFRSs),if applicable,are prima facie evidence of negligence in any court action.

Which of the following can be used by an accountant to counter liability imposed under Section 11(a)of the Securities Act of 1933?

Which one of the following is the most favorable opinion an auditor can give a company following an audit?

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

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

All members of the Public Company Accounting Oversight Board (PCAOB)have to be certified public accountants (CPAs).

The legal theory that holds accountants liable to any member of a limited class of intended users for whose benefit the accountant has been employed is the Section 552 of the Restatement (Second)of Torts.

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

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

Which of the following provides the broadest standard for holding accountants liable to third parties for negligence?

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.

If a state has passed the accountant-client privilege law,it implies that only an accountant can serve as a witness in a case against the client.

A private civil Racketeer Influenced and Corrupt Organizations Act (RICO)based on securities fraud can only be brought once the defendant has been convicted for the crime.

The accountant-client privilege is a law that entails that ________.

The Financial Accounting Standards Board (FASB)issues new Generally Accepted Accounting Principle (GAAP)rules and amends existing ones.

Only purchasers and sellers of securities can sue under Section 10(b)and Rule 10b-5.

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?

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

The Sarbanes-Oxley Act of 2002 prohibits the employment of an accountant by a previous audit client for five years after the first appointment.