Exam 32: Professional Liability

GAAP was created by the FASB.

____________ occurs if the hospital has retained a physician that the governing body of the hospital knew or should have known was incompetent.

An accountant who prepares a fraudulent financial statement is liable to anyone who can be reasonably foreseen as relying on that statement.

When auditors conclude that the financial records of the company are an accurate reflection of the company's financial status, they will issue a(n):

Kits wants to become a CPA and this must be approved by a vote of the SEC.

Hospitals cannot be held liable for the negligence of a physician if that physician is not an employee of the hospital.

When dealing with architects, the "cost of repair" rule applies to situations where a structure is unusable for its originally intended purpose.

Carmine was a patient at the Galion Memorial Hospital. While Carmine was out of the room, Riley accidentally spilled a pitcher of water on the floor of Carmine's room. Before cleaning up the water, Riley took her lunch break. When Carmine returned to his room, he slipped in the puddle of water, fell, and injured himself. Carmine sued Riley and the hospital for negligence. At the trial, Carmine argued that there was no need for an expert witness to testify as to the standard of care rendered by the nurse. Was Carmine correct? Explain.

Ostensible authority is created when a hospital presents itself to the public-at-large as a provider of health care services and, in some way, leads the patient to believe that a physician with staff privileges is an employee of the hospital.

Angela asserts that HIPAA allows her to have copies of the records that result from her psychotherapy sessions with Dr. Xenon. Angela:

Attorney Riana prepares a will for her client, Jones. After Jones dies, Jones's son, Ted, sues Riana because Jones did not minimize the probate process by creating probate-avoiding devices in the will. Discuss if Ted's suit will be successful.

Big Co. hires its auditor, Geraldo, as Vice President for Finance. Geraldo is a partner in Seasoned Accounting, a firm that will continue to audit Big. Discuss the major legal issues this situation raises.

If Small Co. uses a unique and unrecognized accounting method, it will-most likely-be subject to an adverse opinion.

Cal, an investor, lost $15,000 after purchasing corporate stock based on a false registration statement. Under the Securities Act of 1933, Cal:

The Model Rules of Professional Conduct for attorneys was established by:

____________ refer(s) to a system of coordinated health care institutions for Medicare patients developed by the Department of Health and Human Services.

A(n) ____________ opinion is a qualified opinion by an auditor that indicates that the financial statements are an accurate reflection of the company's financial health apart from some minor deviation from GAAP, not serious enough to warrant an adverse opinion.

The federal government's power to regulate accounting emerges from the inherent police powers found in the Fifth Amendment.

Auditors may unconsciously help the organization they audit, rather than the outside investors.

The SEC has the power to develop regulations that will create a "whistleblowing bounty program" analogous to the one used by the IRS.