Exam 6: Legal, Regulatory, and Professional Obligations of Auditors

The SEC case against Pfizer case deals with the issue of improper payments, including hospitality and travel expense, made to doctors and health-care professionals in other countries, and illustrates the importance of an effective system of internal controls, strong corporate governance, and tone at the top. Describe the facts of the case and evaluate the effect on accountants and auditors on disclosing illegal acts and evaluating internal controls.

Distinguish between actually foreseen and reasonably foreseeable third-party liability.

What argument can be made that Sarbanes-Oxley may not be effective in reducing fraud?

The Credit Alliance v. Arthur Andersen & Co. case established three tests that must be satisfied for holding auditors liable for negligence to third parties. All of the following are tests described except for

The defendant-auditors in the Anjoorian case argued, in their defense, that:

The main focus of the Con-Way case is the company's:

The major purpose of the amended Federal Sentencing Guidelines is to:

When an auditor acts so carelessly in the application of professional standards that it implies a reckless disregard for the standards of due care is referred to as

Under the Securities Act of 1933 and the Securities and Exchange Act of 1934, accountants may be subject to criminal penalties for:

Which of the following would normally be considered sufficient to demonstrate due care on the part of the auditor?

The duty of loyalty requires directors to

Under the Securities Act of 1933, if damages were incurred and there was a material misstatement or omission in the financial statements, the CPA will most likely lose the lawsuit unless