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What type(s) of liability do CPA's have in the United States?
                         Common Law Liability          Statutory Law Liability
A)                    Yes                              Yes
B)                    Yes                              No
C)                    No                               Yes
D)                    No                                No

A claim of ordinary negligence against a CPA is most likely to state that the CPAs performed their duties:
A)Without due professional care.
B)With reckless disregard of professional responsibilities.
C)With wanton disregard to GAAS.
D)With reckless disregard to GAAP.

Under which common law approach is an unidentified third party least likely to be able to recover damages from a CPA who is guilty of ordinary negligence?
A)Due Diligence Approach.
B)Ultramares Approach.
C)Restatement of Torts Approach.
D)Rosenblum Approach.

Under which common law approach are auditors most likely to be held liable for ordinary negligence to a "reasonably foreseeable" third party?
A)Due Diligence Approach.
B)Ultramares Approach.
C)Restatement of Torts Approach.
D)Rosenblum Approach.

A CPA is considered 5% responsible for an investor's loss. Under which concept is it most likely that the CPA will be held liable for 100% of the damages if the other defendants are bankrupt?
A)Common law liability.
B)Joint and several liability.
C)Proportionate liability.
D)Statutory liability.

Establishing "due diligence" is most directly related to court cases tried under:
A)Common law by third parties.
B)Common law by clients.
C)The 1933 Securities Act.
D)The 1934 Securities Exchange Act.

A common stock investor's burden of proof relating to a CPA's deficiency of performance under the 1933 Securities Act, when compared to the 1934 Securities Exchange Act, is:

Under common law rules, a claimant suing a CPA firm based on an audit of financial statements must prove each of the following except:
A)A loss was sustained.
B)Reliance upon the audited financial statements was a proximate cause of the loss.
C)The loss sustained was material to the claimant.
D)The auditors were guilty of either ordinary or gross negligence, depending upon the claimant's recovery rights.

The concept of privity may be important in defending auditors against potential claimants. Privity in general only allows:
A)Clients to sue their auditors.
B)Lenders of the client to sue the auditor.
C)Anyone that relied upon the audited financial statements to make a decision to sue the auditor as long as the auditor knew or should have known of such reliance.
D)Shareholders who relied upon the audited financial statements to make an investment decision.

Which of the following is not correct concerning the Securities Act of 1933 and Securities Exchange Act of 1934 with regard to auditor liability?
A)The 1933 Act holds auditors to a higher standard of performance.
B)The 1934 Act provides protection to more third parties.
C)The 1933 Act relates to common law liability, while the 1934 Act relates to statutory law liability.
D)Only the 1934 Act is affected by the Private Securities Litigation Reform Act of 1995 provision for proportionate liability under certain circumstances.

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