Exam 31: Liability of Accountants Other Professionals

Doug is an accountant whose clients include Everyday Products,Inc.(EPI).Under the Ultramares rule,if Doug is negligent in his work for EPI,he could be liable to

An accountant's violation of generally accepted accounting principles is prima facie evidence of negligence.

Daisy Daycare,Inc. ,files a suit against Eldon,its former accountant,al?leging constructive fraud.Eldon may be held liable

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

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

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 as a result of the missed deadline and hires Trey to complete the job.Rex is most likely liable for

Traditionally,a professional owed a duty only to those with whom the professional had a direct contractual relationship.

In most courts,accountants can be liable for negligence to any known us?ers of the accountants' finan?cial reports.

A public accounting firm is a firm engaged in the practice of accounting "in the public interest."

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

Lacy is an accountant who prepares her clients' tax returns.Muff is not an accountant,but he also prepares tax returns for clients.Under the In?ternal Revenue Code,liability for preparing a false return may be im?posed on

Estes,an accountant,contracts to perform services for Frasier.In performing those services,Estes uncovers a suspicious financial transaction.Estes is most likely not liable if he

Each state establishes rules that govern the conduct of attorneys

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

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

Longhaul Trucking,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 in recovering damages,Longhaul must show that Midge

Marquis Company's liabilities exceed its assets,but the firm's employees falsify its books to reflect a positive net worth.Marquis hires Nan & Ollie,an accounting firm,to prepare a balance sheet,which is certified to show a positive net worth.Pure Credit Corporation relies on the balance sheet to make a loan to Marquis.When the firm defaults,Pure Credit files a suit against Nan & Ollie.Under the Ultramares rule,the accounting firm is most likely

Ezra,an accountant,intentionally misstates a material fact to mislead Fruit Packing Industries,Inc. ,a client.Fruit Packing justifiably relies on the misstatement to its detriment.Ezra is most likely liable for

Quentin,an accountant,prepares for Ruff n' Reddy Concrete Corporation a financial state?ment that omits a material fact.The statement is included in Ruff n' Reddy's registration statement filed with the Securities and Exchange Commission.Timor,who reads the statement,and Ubi,who does not,each buy Ruff n' Reddy stock.Under Section 11 of the Securities Act of 1933,Quentin may be liable to

Yvon,an accountant,is charged with negli?gence by Zesty Sauce,Inc. ,a client.Yvon may successfully defend against the claim if she can show that