Ethical Obligations And Decision Making in Accounting Text and Cases 4th Edition by Steven M Mintz Chair – Test Bank

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The key element that protects an auditor against common law liability is: A. Adherence to generally accepted accounting principles (GAAP) 1. B. Adherence to generally accepted auditing standa... rds (GAAS) C. Compliance with threats and safeguards approach D. Maintain confidentiality of client information Which of the following is NOT one of the four stages in an audit-related dispute? A. Events arise that create losses for the users of the financial statements B. Losses are linked to material misstatements of financial statements 2. C. Legal process resolves the dispute D. Auditors legal liability leads to financial settlement Which of the following would normally be considered sufficient to demonstrate due care on the part of the auditor? A. The auditor had its work reviewed by another audit firm 3. B. The auditor cites adherence to generally accepted auditing standards (GAAS) C. No omissions or misstatements have been found in the client’s financial statements D. The auditor signs a statement expressing its unmodified opinion as to the fairness of the financial statements In the U.S., if the auditor can demonstrate having performed services with the same degree of skill and judgment possessed by others in the profession, it can be said to have exercised: A. Prudence B. Scienter 4. C. Nonfeasance D. Due Care The legal precedent that evolves from legal opinions issued by judges in deciding a case and guides judges in deciding similar cases in the future is referred to as: A. Business law 5. B. Tort law C. Common law D. Statutory law A privity relationship means that: A. A party may be a user of the financial statements B. A party may sue if fraud has taken place 6. C. A party’s financial liability is limited D. A party has a contractual obligation 7. The Ultramares v. Touche case of 1933 held that a cause of action based on negligence could not be maintained by a third party who was not in contractual privity; however, it did leave open the possibility that: [Show More]

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