Exam 48: B: Professional Liaility and Accountability

Grover Nut Company files a suit against Hud,its former account?ant,alleging actual fraud.Grover must prove

In some states,in the absence of privity,a party cannot recover from am accountant.

A professional's gross negligence in performing a duty constitutes actual fraud.

Under rules of professional conduct,committing a criminal act that reflects adversely on a person's "honesty" is professional misconduct.

An accountant is not liable for a misstatement in a registration statement to a purchaser of securities if the misstatement was not of a material fact.

In most courts,accountants are subject to liability for negligence only to their clients.

For a plaintiff to recover damages under Section 10(b)of the Securities Exchange Act of 1934 and SEC Rule 10b-5,ordinary negligence is enough.

In all cases involving allegations of negligence,the plaintiff must prove that the professional's breach of the duty of care actually caused some injury.

An attorney may be liable in negligence to any third party.

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

Jim,an accountant,contracts to perform services for Kasey.Jim acts in good faith and conforms with generally accepted accounting principles,but makes a mistake in judgment.Jim is most likely

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

An accountant may be liable for a misstatement or omission of material fact in a registration statement.

Sian,an accountant,prepares a tax return for a client,Toy Sales Company.Vita,who is not an accountant,prepares a tax return for Wu's business,Xtra Delivery Service.Is an accountant who prepares a tax return for a client liable for any false statements in the return? Is a person who is not an accountant and who prepares a tax return for some?one else liable for any false statements in the return?

Under rules of professional conduct,an attorney should not engage in conduct involving "misrepresentation."

Lebron accuses Moe,an attorney,of committing malpractice.Malpractice is

Leslie,an accountant,enters into a contract to provide services to Marty.Leslie does not finish the work within the contract's deadline.Leslie is

National Business Systems Corporation (NBS)files a suit against Molly,its former accountant,alleging constructive fraud.NBS need not prove

Generally,an accountant must possess the skills that an ordinarily prudent accountant would have.

An accountant is not liable for a false statement that affects the price of a security if the buyer or seller of the security knew the statement was false.