Common Law Liabilitiy to clients Flashcards Preview

A Wiley Review Notes REG > Common Law Liabilitiy to clients > Flashcards

Flashcards in Common Law Liabilitiy to clients Deck (9)
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1
Q

A CPA can be liable to the client for negligence if

A

CPA failed to exercise due care (to the level and skill of a normal accountant)

2
Q

A CPA’s defense to neglegance is that he did not

A

Violate GAAP or GAAS performing the audit

3
Q

Lawsuits filed by clients for negligence

A

are filed under common law

4
Q

Elements for Constructive Fraud

A

Misrepresentation
Reckless disregard for the truth
Reliance
Damages

5
Q

An oral contract for an Audit

A

is still enforceable without a signed engagement letter

6
Q

The client’s responsibility is to

A

prepare the financial statements according to GAAP

7
Q

A CPA that does not detect fraud

A

is normally not held liable to the client unless

1) A normal Audit would have detected it
2) agreement that CPA would take greater responsibility
3) wording by audit report indicates greater responsibility

8
Q

In reviewing Financial statements

A

GAAS does not need to be followed

9
Q

What does not necessarily need to be proven in a Constructive fraud case

A

Scienter

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