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5 Written questions

5 Matching questions

  1. Breach of Contract
  2. Common Law
  3. Fraud
  4. Statutory Law
  5. Securities Act of 1934
  1. a intentional concealment or misrepresentation of a material fact that causes damage to those deceived. Scienter must be proved.
  2. b when a person fails to perform a contractual duty
  3. c liability concepts are developed through court decisions based on negligence, gross negligence, fraud, or breach of contract
  4. d Liability is based on federal securities laws or state stutes
  5. e Established the SEC and established requirement for annual audited financial statements

5 Multiple choice questions

  1. Place emphasis within firm on complying with GAAS and professional ethics,
    investigate prospective clients thoroughly,
    obtain a thorough knowledge of clients business,
    use engagement letters to prevent misunderstanding, asses risk of errors and irregularities, exercise extreme care in audits of clients with high business risk, carefully prepare and review working papers.
  2. knowledge on the part of the person making the representations, at the time they are made that they are false.
  3. 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.
  4. if lose case client owes lawyer nothing, if win lawer get a % of winnings.
  5. 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

5 True/False questions

  1. Securities Act of 1933Established the SEC and established requirement for annual audited financial statements

          

  2. Gross Negligencefailure to use minimal care or operating with a "reckless diregard for the truth" or "reckless behavior"

          

  3. Rosenblum ApproachAuditors 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

          

  4. Negligencefailure to exercise reasonable care, thereby causeing harm to another or to property

          

  5. US vs Arthur Andersenaccused of wholesale destruction of documents relating to the Enron Coporation collapse. Loss of case put Arthur Andersen out of business. Conviction was overturned by U.S. Supreme Court.

          

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