Exam 51: Professional Liaility and Accountability

Rollo is an attorney whose clients include Superior Company. If Rollo is negligent in his work for Superior, under the Restatement (Second) of Torts, Rollo may be liable to Superior and

A professional whose client justifiably relies on the professional's mis?statement may be liable for constructive fraud.

Bryce's accountant is Caleb and his attorney is Delilah. All states protect, as privileged information, Bryce's communications with

Quibble Company's liabilities exceed its assets. Quibble hires Roo & Slay, an accounting firm, to prepare a balance sheet. Through Roo & Slay's negligent omissions, the sheet shows a net worth. Town Bank relies on the balance sheet to make a loan to Quibble. When Quibble defaults, Town files a suit against Roo & Slay. Under the Restatement rule, Roo & Slay is most likely

Lee, an accountant, is subject to the ac?counting conventions, rules, and procedures that constitute generally ac?cepted accounting principles (GAAP). GAAP are determined by

Delta Products, Inc., files a suit against Evan, its former accountant, al?leging constructive fraud. Evan may be held liable

Longhaul, Inc., files a suit against Midge, an accountant, under the antifraud provisions of the Securities Exchange Act of 1934 and Rule 10b-5 of the Securities and Exchange Commission. To succeed, Longhaul must show that Midge

Tom is an attorney. Tom's conduct is governed by rules of professional conduct established by the state in which he is licensed, and the Code of Professional Responsibility and Model Rules of Professional Conduct drafted by

An accountant who prepares a financial state?ment in good faith may avoid liability under Section 18 of the Securities Ex?change Act.

Each state establishes rules that govern the conduct of attorneys

Rex, an accountant, enters into a contract to provide services to Sofi. Rex does not finish the work within the contract's deadline. Sofi pays a penalty for the missed deadline and hires Trey to complete the job. Rex is most likely liable for

Dan and Eve are accountants who work together. Dan and Eve can limit their potential liability for each other's misconduct by organizing their business as

A failure to follow generally accepted accounting principles and gener?ally accepted auditing standards is proof of a lack of due diligence.

An accountant is not liable for a misstatement to a purchaser of securities who knew of the misstatement but invested anyway.

The liability of professionals is based solely on common law.

Tony is an accountant whose clients include U-All Company. If Tony is negligent in his work for U-All, most courts would hold him liable to U-All and

In a few states, communications between an accountant and his or her client are privileged.

Under state rules of professional misconduct, an attorney should not engage in conduct involving "dishonesty."

Jim, an attorney, allows a statute of limitations to lapse on a claim by Midwest Manufacturing Company, a client. Jim

An attorney may be liable in negligence to any third party who the attorney knows will rely on the attorney's work.