Exam 15: Legal Liability

Lauren hires Humphrey,a CPA,to audit her financial statements.The engagement letter includes a statement acknowledging that audited financial statements are required to be filed with a regulatory body by October 1.Humphrey does not complete the audit until October 5.Lauren is late filing the financial statements and is fined $100,000 by the regulatory body.Lauren would most likely sue Humphrey claiming:

(Multiple Choice)

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Question 41

Beckler & Associates,CPAs,examined and issued an unqualified opinion on the financial statements of Queen Co.The financial statements contained misstatements that resulted in a material overstatement of Queen's net worth.Queen provided the audited financial statements to Mac Bank in connection with a loan made by Mac to Queen.Beckler knew that the financial statements would be provided to Mac.Queen defaulted on the loan.Mac sued Beckler to recover for its losses associated with Queen's default.Which of the following must Mac prove in order to recover?

(Multiple Choice)

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Question 42

Which of the following parties is most likely to recover against auditors for losses resulting from acts of ordinary negligence?

(Multiple Choice)

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Question 43

While conducting an audit,Larson Associates,CPAs,failed to detect material misstatements included in its client's financial statements.Larson's unqualified opinion was included with the financial statements in a registration statement and prospectus for a public offering of securities made by the client.Larson knew that its opinion and the financial statements would be used for this purpose.Which of the following statements is correct with regard to a suit against Larson and the client by a purchaser of the securities under section 11 of the Securities Act of 1933?

(Multiple Choice)

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Question 44

How does the Securities Act of 1933,which imposes civil liability on auditors for misrepresentations or omissions of material facts in a registration statement,expand auditors' liability to purchasers of securities beyond that of common law?

(Multiple Choice)

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Question 45

Failure to provide any level care in fulfilling a duty owed to another party,including reckless disregard for the truth,is called

(Multiple Choice)

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Question 46

Third-party plaintiffs bringing action under common law need not prove

(Multiple Choice)

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Question 47

Typical defenses for auditors in common law actions include all of the following,except

(Multiple Choice)

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Question 48

Distinguish between the "due diligence" and the "causation" defenses available to auditors under section 11 of the Securities Act of 1933.

(Essay)

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Question 49

Which of the following statements concerning the Ultramares Corp.v.Touche case is not true?

(Multiple Choice)

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Question 50

Which of the following would not need to be demonstrated by third parties bringing suit against auditors for losses sustained under the Securities Act of 1933?

(Multiple Choice)

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Question 51

To be successful in a civil action under section 11 of the Securities Act of 1933 against auditors for liability for a materially misstated registration statement,the plaintiff must prove the

(Multiple Choice)

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Question 52

Foreseeable third parties are best described as

(Multiple Choice)

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Question 53

What are the legal liabilities of auditors under common law?

(Essay)

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Question 54

Showing 41 - 54 of 54

Which of the following parties is most likely to recover against auditors for losses resulting from acts of ordinary negligence?

How does the Securities Act of 1933,which imposes civil liability on auditors for misrepresentations or omissions of material facts in a registration statement,expand auditors' liability to purchasers of securities beyond that of common law?

Failure to provide any level care in fulfilling a duty owed to another party,including reckless disregard for the truth,is called

Third-party plaintiffs bringing action under common law need not prove

Typical defenses for auditors in common law actions include all of the following,except

Distinguish between the "due diligence" and the "causation" defenses available to auditors under section 11 of the Securities Act of 1933.

Which of the following statements concerning the Ultramares Corp.v.Touche case is not true?

Which of the following would not need to be demonstrated by third parties bringing suit against auditors for losses sustained under the Securities Act of 1933?

To be successful in a civil action under section 11 of the Securities Act of 1933 against auditors for liability for a materially misstated registration statement,the plaintiff must prove the

Foreseeable third parties are best described as

What are the legal liabilities of auditors under common law?

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