A) requires that the CPA guarantee their work. B) requires that the auditor performs work with due care. C) requires that the auditor performs work with due diligence. D) does not recognize the concept of constructive fraud. A) requires that the CPA guarantee their work. B) requires that the auditor performs work with due care. C) requires that the auditor performs work with due diligence. D) does not recognize the concept of constructive fraud.

Exam 20: Legal Liability

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.In a suit by a purchaser against Larson for common-law negligence,Larson's best defense would be that the

(Multiple Choice)

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Question 41

What is the primary reason that Congress passed the Securities Litigation Uniform Standards Act of 1998?

(Multiple Choice)

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Question 42

Briefly describe the Sarbanes-Oxley Act of 2002.Be sure to mention (1)who passed the Act,(2)its primary objectives,(3)major aspects of the Act,(4)the parties that it affects,and (5)its relationship to the SEC rules.

(Essay)

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Question 43

Ford & Co.,CPAs,issued an unqualified opinion on Owens Corp.'s financial statements.Relying on these financial statements,Century Bank lent Owens $750,000.Ford was unaware that Century would receive a copy of the financial statements or that Owens would use them to obtain a loan.Owens defaulted on the loan.To succeed in a common law fraud action against Ford,Century must prove,in addition to other elements,that Century was

(Multiple Choice)

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Question 44

Suits are often brought against auditors that allege that the auditors did not detect some type of fraud or defalcation.List the six defenses that the auditors could mount against client negligence claims.

(Essay)

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Question 45

In regards to the Foreign Corrupt Practices Act (FCPA),external auditors

(Multiple Choice)

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Question 46

This act increased protection available to whistleblowers.

(Multiple Choice)

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Question 47

Which statement is correct concerning an auditor's statutory legal liability?

(Multiple Choice)

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Question 48

A tort is a breach of contract for which civil action may be taken.

(True/False)

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Question 49

The most restrictive view under common law is that auditors have no liability to third parties who do not have a privity relationship with the auditor.Briefly define privity and the effect it has on the auditor,client,investors,and creditors under common law.

(Essay)

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Question 50

Common law

(Multiple Choice)

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Question 51

Under common law,which of the following statements most accurately reflects the liability of a CPA who fraudulently gives an opinion on an audit of a client's financial statements?

(Multiple Choice)

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Question 52

Under the antifraud provisions of Section 10(b)of the Securities Exchange Act of 1934,a CPA may be liable if the CPA acted

(Multiple Choice)

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Question 53

Which of the following is not required for establishing an auditor's liability for negligence?

(Multiple Choice)

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Question 54

An auditor can be held criminally liable for

(Multiple Choice)

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Question 55

In general,the third-party (primary)beneficiary rule as applied to a CPA's legal liability in conducting an audit is relevant to which of the following causes of action against a CPA?

(Multiple Choice)

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Question 56

A CPA will most likely be negligent when the CPA fails to

(Multiple Choice)

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Question 57

Why are plaintiffs motivated to bring actions under RICO?

(Multiple Choice)

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Question 58

The auditor failing to complete the services agreed to in the contract with the client is subject to liability under breach of contract.

(True/False)

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Question 59

Hark,CPA,failed to follow generally accepted auditing standards in auditing Long Corp.'s financial statements.Long's management had told Hark that the audited statements would be submitted to several banks to obtain financing.Relying on the statements,Third Bank gave Long a loan.Long defaulted on the loan.In a jurisdiction applying the Ultramares doctrine,if Third sues Hark,Hark will

(Multiple Choice)

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Question 60

Showing 41 - 60 of 65

What is the primary reason that Congress passed the Securities Litigation Uniform Standards Act of 1998?

Briefly describe the Sarbanes-Oxley Act of 2002.Be sure to mention (1)who passed the Act,(2)its primary objectives,(3)major aspects of the Act,(4)the parties that it affects,and (5)its relationship to the SEC rules.

Suits are often brought against auditors that allege that the auditors did not detect some type of fraud or defalcation.List the six defenses that the auditors could mount against client negligence claims.

In regards to the Foreign Corrupt Practices Act (FCPA),external auditors

This act increased protection available to whistleblowers.

Which statement is correct concerning an auditor's statutory legal liability?

A tort is a breach of contract for which civil action may be taken.

The most restrictive view under common law is that auditors have no liability to third parties who do not have a privity relationship with the auditor.Briefly define privity and the effect it has on the auditor,client,investors,and creditors under common law.

Common law

Under common law,which of the following statements most accurately reflects the liability of a CPA who fraudulently gives an opinion on an audit of a client's financial statements?

Under the antifraud provisions of Section 10(b)of the Securities Exchange Act of 1934,a CPA may be liable if the CPA acted

Which of the following is not required for establishing an auditor's liability for negligence?

An auditor can be held criminally liable for

In general,the third-party (primary)beneficiary rule as applied to a CPA's legal liability in conducting an audit is relevant to which of the following causes of action against a CPA?

A CPA will most likely be negligent when the CPA fails to

Why are plaintiffs motivated to bring actions under RICO?

The auditor failing to complete the services agreed to in the contract with the client is subject to liability under breach of contract.

An Introduction to Assurance and Financial Statement Auditing

The Financial Statement Auditing Environment

Audit Planning, Types of Audit Tests, and Materiality

Risk Assessment

Evidence and Documentation

Internal Control in a Financial Statement Audit

Auditing Internal Control Over Financial Reporting

Audit Sampling: An Overview and Application to Tests of Controls

Audit Sampling: An Application to Substantive Tests of Account Balances

Auditing the Revenue Process

Auditing the Purchasing Process

Auditing the Human Resource Management Process

Auditing the Inventory Management Process

Auditing the Financinginvesting Process: Prepaid Expenses, Intangible Assets, and Property, Plant, and Equipment

Auditing the Financinginvesting Process: Long-Term Liabilities, Stockholders Equity, and Income Statement Accounts

Auditing the Financinginvesting Process: Cash and Investments

Completing the Audit Engagement

Reports on Audited Financial Statements

Professsional Conduct,Independence,and Quality Control

Assurance,Attestation,amd Internal Auditing Services-professional Judgement Module

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