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| 1 | |
An accountant is liable for __________ if he or she fails to exercise the care of a competent, reasonable professional and that failure causes loss or injury to the client. |
| | A) | Negligence |
| | B) | Strict liability |
| | C) | Absolute liability |
| | D) | Criminal recklessness |
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| 2 | |
Which of the following is not an essential element of accountant fraud liability? |
| | A) | The accountant misrepresented a material fact |
| | B) | The accountant acted with the intent to deceive |
| | C) | The client unjustifiably relied on the misrepresentation |
| | D) | The client suffered an injury by relying on the fraudulent information |
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| 3 | |
Accountants may be liable to individuals in all but which of the following groups? |
| | A) | Those in privity or near-privity of contract |
| | B) | Foreseen users |
| | C) | Incidental users |
| | D) | Reasonably foreseeable users |
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| 4 | |
The "Restatement Test" refers to accountant liability to which of the following categories of individuals? |
| | A) | Those in privity or near-privity of contract |
| | B) | Foreseen users |
| | C) | Incidental users |
| | D) | Reasonably foreseeable users |
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| 5 | |
The "Ultramares Rule" refers to accountant liability to which of the following categories of individuals? |
| | A) | Those in privity or near-privity of contract |
| | B) | Foreseen users |
| | C) | Incidental users |
| | D) | Reasonably foreseeable users |
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| 6 | |
The __________ holds an accountant liable to any third party that was or should have been foreseen as a possible user of the accountant's work product, and that, in fact, did use and rely on that work product for a proper business purpose. |
| | A) | The "Restatement Test" |
| | B) | The "Ultramares Rule" |
| | C) | The "reasonably foreseeable users" test |
| | D) | None of the above |
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| 7 | |
___________ are the various documents used and developed during an audit, including notes, calculations, copies, memorandums, and other papers constituting the accountant's work product. |
| | A) | Confidential memoranda |
| | B) | Certified memoranda |
| | C) | "Working papers" |
| | D) | None of the above |
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| 8 | |
Accountant-client privilege is a(n) __________ privilege. |
| | A) | Unlimited |
| | B) | Qualified (limited) |
| | C) | Absolute |
| | D) | Non-existent |
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| 9 | |
The __________ placed new statutory obligations on accountants by requiring them to use adequate procedures when performing an audit, so they can detect any illegal acts committed by the audited company. It also lists a specific set of actions and guidelines an accountant must follow after identifying a potentially illegal activity. |
| | A) | Securities Act of 1895 |
| | B) | Securities Act of 1964 |
| | C) | Public Securities Litigation Reform Act of 1985 |
| | D) | Private Securities Litigation Reform Act of 1995 |
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| 10 | |
The Sarbanes-Oxley Act of 2002 encourages auditor independence by prohibiting registered public accounting firms from engaging in all but which of the following non-auditing acts? |
| | A) | Bookkeeping |
| | B) | Actuarial services |
| | C) | Attending professional sporting events with clients |
| | D) | Internal-audit outsourcing services |
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