Question 1

Under the Sarbanes-Oxley Act of 2002, an accountant must dispose of working papers on the conclusion of the audit to which the papers relate.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A)  actual fraud. 
B)  constructive fraud. 
C)  destructive fraud. 
D)  virtual fraud.

Question 3

Dominique, a certified public accountant, provides accounting serv?ices to Eagle Corporation. The services include preparing Eagle's financial re?ports and issuing opinion letters based on the reports. In 2008, Eagle falls into serious financial trouble, but neither Dominique's reports nor her opinion let?ters indicate this situation. Relying on Dominique's portrayal of Eagle's finan?cial situation, Eagle borrows a large sum of money to build a new ship?ping facility. In lending Eagle the money, First National Bank relies on Dominique's opinion letter. Dominique is aware of this reliance. If Dominique did not en?gage in intentional fraud but was negligent, what is her potential liability?

Accepted Answer

The answer of Dominique, a certified public accountant, provides accounting...

Question 4

Lara, an accountant, conducts an audit of Microstuff, Inc. After the conclu?sion of the audit, the working papers created in preparing the audit must be

Accepted Answer

A)  disposed of immediately. 
B)  kept until the Public Company Accounting Oversight Board's review. 
C)  maintained for seven years. 
D)  retained forever.

Exam 51: Professional Liaility and Accountability

Under the Sarbanes-Oxley Act of 2002, an accountant must dispose of working papers on the conclusion of the audit to which the papers relate.

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

Lara, an accountant, conducts an audit of Microstuff, Inc. After the conclu?sion of the audit, the working papers created in preparing the audit must be