Exam 51: Accountants Duties and Liability

A person who practices as an accountant, but is not certified, is referred to as a public accountant.

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

Which of the following legislations provides for both civil and criminal penalties, including up to recovering treble damages, for securities fraud by accountants?

Which of the following statements is true of accountants?

Which of the following is true of an auditor of a corporation?

The ________ is a rule that says that an accountant is liable only for negligence to third parties who are in privity of contract or in a privity-like relationship with the accountant.

An auditor's opinion that the company's financial statements fairly represent the company's financial position, the results of its operations, and the change in cash flows for the period under audit, in conformity with generally accepted accounting principles is referred to as a(n) ________.

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.

A formal entrance into a contract between a client and an accountant is called abatement.

The ________ Act of 1976 specifically imposes penalties and fines for the willful understatement of a client's tax liability.

Constructive fraud is defined as intentional misrepresentation or omission of a material fact that is relied on by a client and causes the client damage.

The Securities Act of 1933 requires that before a corporation or another business sells securities to the public, the issuer must file a registration statement with the Securities and Exchange Commission (SEC).

A third party can bring a tort action against an accountant in case of constructive fraud.

The Securities and Exchange Commission (SEC) has the power to file criminal charges and award punishment for violations that come under Section 32(a) of the Securities Exchange Act of 1934.

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

An accountant's failure to follow the Generally Accepted Auditing Standards (GAASs) when conducting audits constitutes negligence.

Pursuant to federal securities laws, an audit must be performed by a certified public accountant (CPA) who works closely with the company in the capacity of a chief executive officer (CEO) or a chief financial officer (CFO).

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

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

The Tax Reform Act of 1976 created the Public Company Accounting Oversight Board (PCAOB).