Exam 33: Liability of Accountants and Other Professionals

Delaney is an accountant charged with negligence by Estimation & Valuation Services Inc., a client. Delaney may successfully defend against the claim if he can show that​

An accountant normally will notbe held liable to the client for incorrect judgment.

Farley, an accountant, intentionally misstates a material fact to mislead Global Industries, Inc., a client. Global justifiably relies on the misstatement to its detriment. Farley is most likely liable for​

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

Generally, an attorney is not liable to a nonclient unless the attorney has committed fraud or malicious conduct.

Tyson accuses Ulman, an attorney, of committing malpractice. Malpractice is​

Professionals are required to deliver services but the competency of the services is never an issue.

For a plaintiff to recover damages under Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5, proof of intent is necessary.

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

Brenda is an attorney whose clients include Capital Finance Company. If Brenda is negligent in her work for Capital, under the Restatement (Third) of Torts, Brenda may be liable to Capital and​

Edward, an attorney, allows a statute of limitations to lapse on a claim by Fabrication Company, a client. Edward​

Professionals are governed by the contracts they enter into with their clients.

Under rules of professional conduct, committing a criminal act that reflects adversely on a person's "honesty" is professional misconduct.

Hadley, an accountant, accumulates working papers while performing an audit for Ilene. After the audit, these documents belong to​

Lauren is an attorney. Like the conduct of all attorneys, Lauren's conduct is governed by rules of professional conduct established by the state in which she is licensed, and the Model Rules of Professional Conduct of​

Negligence cases against professionals often focus on the standard of care exercised by the professional.

An accountant is not liable for a false statement that affects the price of a security if the buyer or seller of the security knew the statement was false.

An accountant may be liable for a misstatement or omission of material fact in a registration statement.

Randi, an accountant, includes a false statement in a report for Social Media Marketing, Inc., that is filed with the Securities and Exchange Commission. When Theo buys stock in Social Media and loses money on the investment, he files a suit against Randi, alleging fraud under the 1934 Securities Exchange Act. To avoid liability, Randi can show that she​

Generally, an accountant must exercise the degree of care that an ordinarily prudent accountant would exercise.