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1.
(p. 258)
Accountants may not be sued for malpractice because that action is only available in the
medical community.
2.
(p. 260)
An accountant who commits fraud is liable to those parties he or she reasonably should
have foreseen would be injured through a justifiable reliance upon the fraudulent information.
3.
(p. 260)
Over the last few years, plaintiffs have been successful in bringing fraud suits against
accountants under the Racketeer Influenced and Corrupt Organizations Act.
4.
(p. 261)
Whether third parties have a claim against an accountant on the basis of their reliance
upon negligently prepared financial statements is the same in all states because it is governed by
federal law.
5.
(p. 264)
The reasonably foreseeable users test holds an accountant liable to any third-party who
was or should have been foreseen as a possible user of the accountant's work product and did, in
fact, use and rely upon that work product for a proper business purpose.
6.
(p. 267)
After an audit, the accountant is the legal owner of working papers.
7.
(p. 268)
When a federal law is at issue, state protection of an accountant-client privilege does not
apply.
8.
(p. 268)
A plaintiff may only recover under Section 11 of the Securities Act of 1933 if the plaintiff
can establish that the plaintiff purchased securities in an initial public offering.
9.
(p. 277)
In the Case Opener "WorldCom," the court ruled that the chairman of WorldCom's board
of directors could have no personal liability for misrepresentations of the company's condition in
filings with the Securities and Exchange Commission.
10.
(p. 263)
Regarding liability for negligence to third parties, under the Restatement test, an
accountant is liable to known third-party users of the accountant's work product and also to
those in the limited class whose reliance on the work the accountant specifically foresaw.
11.
(p. 269)
Which of the following was the result on appeal in the case in the text
In re Century
Aluminum Company Securities Litigation
, the case in the text involving plaintiffs who purchased
secondary-offering shares and who attempted to sue under Section 11 of the Securities Act of
1933 for misrepresentations allegedly released regarding the secondary offering?
12.
(p. 272)
Which of the following was the result at the Supreme Court level in
Matrixx
Initiatives
Inc., v. Siracusano
, the case in the text in which the plaintiffs brought a class action alleging that
the defendant violated security laws by failing to release reports that its product Zicam Cold
Remedy had been found to result in a loss of smell?
13.
(p. 258)
An action against an accountant for failing to properly perform the job for which the
accountant was hired is referred to as a[n] _________ action.
14.
(p. 258)
After a significant amount of responsibility for the bankruptcy of ____________
Corporation was placed on the firms that provided accounting services for the corporation, the
role of accountants became a question of significant public interest.
15.
(p. 258)
What are the three primary types of liability assessed against accountants under common
law?
16.
(p. 259)
At a minimum, the duty of care of the accountant entails compliance with which of the
following?
17.
(p. 259)
Which of the following established GAAP?
18.
(p. 259)
GAAS was established by which of the following?
19.
(p. 259)
Which of the following is
false
regarding compliance with GAAP and GAAS?
20.
(p. 258)
Generally, unless engaged to detect __________, an accountant is not a fraud detector
unless the fraud is uncovered in the course of exercising reasonable care and skill.
21.
(p. 259)
When an audit is complete, an accountant usually issues a[n] _______________ letter
stating his or her assessment of the company that was audited.
22.
(p. 259)
A financial statement is considered ____________ if no, or insubstantial, accounting
procedures were used in the compilation of the document.
23.
(p. 260)
The contract entered into with a client when an accountant is hired to perform a task is
referred to as a[n] ______________.
24.
(p. 260)
In the instance of a breach of contract where the accountant, however, completed
substantial performance, an accountant is entitled to which of the following?
25.
(p. 260)
Which of the following is fraud without fraudulent intent?
26.
(p. 260)
When an accountant is found liable for fraud, what type of damages may be assessed in
addition to compensatory damages in order to punish the accountant?
27.
(p. 261)
Which of the following involves accountant liability to third parties based upon privity or
near privity?
