Question 1

The expectation gap:

Accepted Answer

A) exists between the auditor and the SEC. 
B) exists because auditors guarantee the accuracy of the financial statements. 
C) often results in unwarranted lawsuits against the auditor. 
D) is a legal concept supported by the federal courts. 
A) exists between the auditor and the SEC. 
B) exists because auditors guarantee the accuracy of the financial statements. 
C) often results in unwarranted lawsuits against the auditor. 
D) is a legal concept supported by the federal courts.

Question 2

A third-party beneficiary is one which:

Accepted Answer

A) has failed to establish legal standing before the court. 
B) does not have privity of contract and is unknown to the contracting parties. 
C) does not have privity of contract, but is known to the contracting parties and intended to benefit under the contract. 
D) may establish legal standing before the court after a contract has been consummated. 
A) has failed to establish legal standing before the court. 
B) does not have privity of contract and is unknown to the contracting parties. 
C) does not have privity of contract, but is known to the contracting parties and intended to benefit under the contract. 
D) may establish legal standing before the court after a contract has been consummated.

Question 3

Under the Securities Act of 1933, the auditor's responsibility for making sure the financial statements were fairly stated extends to:

Accepted Answer

A) the date of the financial statements. 
B) the date the registration statement becomes effective. 
C) the date of the audit report. 
D) one year beyond the date of the financial statements. 
A) the date of the financial statements. 
B) the date the registration statement becomes effective. 
C) the date of the audit report. 
D) one year beyond the date of the financial statements.

Question 4

The doctrine of joint and several liability is one factor that has contributed to the recent increase in the number of lawsuits against auditors and the size of awards to plaintiffs.

Accepted Answer

A) True 
 B)False

Question 5

Distinguish between constructive fraud and fraud.

Accepted Answer

Constructive fraud is the existence of e

Question 6

In the auditing environment, failure to meet auditing standards is often:

Accepted Answer

A) an accepted practice. 
B) a suggestion of negligence. 
C) conclusive evidence of negligence. 
D) tantamount to criminal behavior. 
A) an accepted practice. 
B) a suggestion of negligence. 
C) conclusive evidence of negligence. 
D) tantamount to criminal behavior.

Question 7

Match between columns
                        Premises: Laws that have been passed by the U.S.Congress and other governmental units.
Absence of reasonable care that can be expected of a person in a set of circumstances.
Lack of even slight care tantamount to reckless behavior that can be expected of a person.
The assessment against a defendant of that portion of the damage caused by the defendant's negligence.
Failure of one or both parties in a contract to fulfill the requirements of the contract.
The assessment against a defendant of the full loss suffered by a plaintiff regardless of the extent to which other parties shared in the wrongdoing.
Existence of extreme or unusual negligence even though there was no intent to deceive or do harm; also termed recklessness.

Accepted Answer

The Answer of Third-party beneficiary and Fraud and Separate and is...

Question 8

Several states have statutes that permit privileged communication between the client and auditor, allowing a CPA to refuse to testify in state and federal courts.

Accepted Answer

A) True 
 B)False

Question 9

The principal issue to be resolved in cases involving alleged negligence is usually:

Accepted Answer

A) the amount of the damages suffered by plaintiff. 
B) whether to impose punitive damages on defendant. 
C) the level of care exercised by the CPA. 
D) whether defendant was involved in fraud. 
A) the amount of the damages suffered by plaintiff. 
B) whether to impose punitive damages on defendant. 
C) the level of care exercised by the CPA. 
D) whether defendant was involved in fraud.

Question 10

The assessment against a defendant of the full loss suffered by a plaintiff regardless of the extent to which other parties shared in the wrongdoing is called:

Accepted Answer

A) separate and proportionate liability. 
B) shared liability. 
C) unitary liability. 
D) joint and several liability. 
A) separate and proportionate liability. 
B) shared liability. 
C) unitary liability. 
D) joint and several liability.

Question 11

Section 10 and Rule 10b-5 of the Securities Exchange Act of 1934 are often referred to as:

Accepted Answer

A) the antifraud provisions. 
B) the new issues provisions. 
C) the full employment act for accountants. 
D) the RICO provisions. 
A) the antifraud provisions. 
B) the new issues provisions. 
C) the full employment act for accountants. 
D) the RICO provisions.

Question 12

One result from the Escott et al.v.Bar Chris case was a greater emphasis being placed on audit staff understanding the client's business and industry.

Accepted Answer

A) True 
 B)False

Question 13

Statutory laws are laws that have been developed through court decisions rather than through the U.S.Congress and other governmental units.

Accepted Answer

A) True 
 B)False

Question 14

In the performance of an audit, a CPA:

Accepted Answer

A) is legally liable for detecting an immaterial client fraud. 
B) must strictly follow GAAP for privately held clients. 
C) must exercise constructive professional care in the performance of their audit responsibilities. 
D) must exercise due professional care in the performance of their audit responsibilities. 
A) is legally liable for detecting an immaterial client fraud. 
B) must strictly follow GAAP for privately held clients. 
C) must exercise constructive professional care in the performance of their audit responsibilities. 
D) must exercise due professional care in the performance of their audit responsibilities.

Question 15

A CPA is subject to criminal liability if the CPA:

Accepted Answer

A) refuses to turn over requested audit documentation to a client. 
B) performs an audit in a negligent manner. 
C) is knowingly involved with false financial statements. 
D) willfully breaches a contract with a client. 
A) refuses to turn over requested audit documentation to a client. 
B) performs an audit in a negligent manner. 
C) is knowingly involved with false financial statements. 
D) willfully breaches a contract with a client.

The expectation gap:

A third-party beneficiary is one which:

Under the Securities Act of 1933, the auditor's responsibility for making sure the financial statements were fairly stated extends to:

The doctrine of joint and several liability is one factor that has contributed to the recent increase in the number of lawsuits against auditors and the size of awards to plaintiffs.

Distinguish between constructive fraud and fraud.

In the auditing environment, failure to meet auditing standards is often:

Several states have statutes that permit privileged communication between the client and auditor, allowing a CPA to refuse to testify in state and federal courts.

The principal issue to be resolved in cases involving alleged negligence is usually:

The assessment against a defendant of the full loss suffered by a plaintiff regardless of the extent to which other parties shared in the wrongdoing is called:

Section 10 and Rule 10b-5 of the Securities Exchange Act of 1934 are often referred to as:

One result from the Escott et al.v.Bar Chris case was a greater emphasis being placed on audit staff understanding the client's business and industry.

Statutory laws are laws that have been developed through court decisions rather than through the U.S.Congress and other governmental units.

In the performance of an audit, a CPA:

A CPA is subject to criminal liability if the CPA:

The Demand for Audit and Other Assurance Services

The Cpa Profession

Audit Reports

Professional Ethics

Audit Responsibilities and Objectives

Audit Evidence

Audit Planning and Analytical Procedures

Materiality and Risk

Internal Control, Control Risk, and Section 404 Audits

Fraud Auditing

The Impact of Information Technology on the Audit Process

Overall Audit Strategy and Audit Program

Audit of the Sales and Collection Cycle: Tests of Controls and Substantive Tests of Transactions

Audit Sampling for Tests of Controls and Substantive Tests of Transactions

Completing the Tests in the Sales and Collection Cycle: Accounts Receivable

Audit Sampling for Tests of Details of Balances

Audit of the Acquisition and Payment Cycle: Tests of Controls, Substantive Tests of Transactions, and Accounts Payable

Completing the Tests in the Acquisition and Payment Cycle: Verification of Selected Accounts

Audit of the Payroll and Personnel Cycle

Audit of the Inventory and Warehousing Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash and Financial Instruments

Completing the Audit

Other Assurance Services

Internal and Governmental Financial Auditing and Operational Auditing

Filters

Exam 5: Legal Liability

The expectation gap:

A third-party beneficiary is one which:

Under the Securities Act of 1933, the auditor's responsibility for making sure the financial statements were fairly stated extends to:

The doctrine of joint and several liability is one factor that has contributed to the recent increase in the number of lawsuits against auditors and the size of awards to plaintiffs.

Distinguish between constructive fraud and fraud.

In the auditing environment, failure to meet auditing standards is often:

Several states have statutes that permit privileged communication between the client and auditor, allowing a CPA to refuse to testify in state and federal courts.

The principal issue to be resolved in cases involving alleged negligence is usually:

The assessment against a defendant of the full loss suffered by a plaintiff regardless of the extent to which other parties shared in the wrongdoing is called:

Section 10 and Rule 10b-5 of the Securities Exchange Act of 1934 are often referred to as:

One result from the Escott et al.v.Bar Chris case was a greater emphasis being placed on audit staff understanding the client's business and industry.

Statutory laws are laws that have been developed through court decisions rather than through the U.S.Congress and other governmental units.

In the performance of an audit, a CPA:

A CPA is subject to criminal liability if the CPA:

The Demand for Audit and Other Assurance Services

The Cpa Profession

Audit Reports

Professional Ethics

Audit Responsibilities and Objectives

Audit Evidence

Audit Planning and Analytical Procedures

Materiality and Risk

Internal Control, Control Risk, and Section 404 Audits

Fraud Auditing

The Impact of Information Technology on the Audit Process

Overall Audit Strategy and Audit Program

Audit of the Sales and Collection Cycle: Tests of Controls and Substantive Tests of Transactions

Audit Sampling for Tests of Controls and Substantive Tests of Transactions

Completing the Tests in the Sales and Collection Cycle: Accounts Receivable

Audit Sampling for Tests of Details of Balances

Audit of the Acquisition and Payment Cycle: Tests of Controls, Substantive Tests of Transactions, and Accounts Payable

Completing the Tests in the Acquisition and Payment Cycle: Verification of Selected Accounts

Audit of the Payroll and Personnel Cycle

Audit of the Inventory and Warehousing Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash and Financial Instruments

Completing the Audit

Other Assurance Services

Internal and Governmental Financial Auditing and Operational Auditing

Filters