5 Written questions
5 Matching questions
- Common Law
- Causes of Legal Action
- Securities Act of 1934
- Breach of Contract
- Litigation Perspective
- a when a person fails to perform a contractual duty
- b Established the SEC and established requirement for annual audited financial statements
- c Breach of Contract, Negligence
- d liability concepts are developed through court decisions based on negligence, gross negligence, fraud, or breach of contract
- e Result of inadequate audit performance,
most cases: many estimates made by client are proven wrong,
Deep pockets theory
5 Multiple choice questions
- Common Law, Statutory Law
- Duty - CPA accepted a duty of due professinal care.
Breach of Duty - CPA breached contract.
Losses - Suffered by Plaintiff.
Causation - Losses were caused by CPA's performance.
- Auditors were held criminally liable for gross negligence. Largely responsible for the development of required disclosure of related party transactions
- defendant would be required to pay a proportionate share of the damage, depending on the degree of fault determined by judge or jury
- Auditors should have realized it was reasonably foreseeable that audited financial statements would be used for routine business purposes. Opens door to liability for ordinary negligence to virtually all third parties who rely on the statements
5 True/False questions
Contingent-fee cases → if lose case client owes lawyer nothing, if win lawer get a % of winnings.
Private Securities Litigation Reform Act 1995 → Established the SEC and established requirement for annual audited financial statements
CPA Liability → failure to exercise reasonable care, thereby causeing harm to another or to property
Securities Exchange Commission → has power to prohibit CPA's from reporting on SEC registrants' financial statments. Can take punitive action against public accounting firms. Auditors are required to report any illegal acts by clients to SEC if client fails to report them
Scienter → knowledge on the part of the person making the representations, at the time they are made that they are false.