For items 1 through 12, indicate whether the statement is true or false.

- 1. 2.	A CPA who negligently gives an opinion on an audit of a client's financial statements is liable only to those third parties who are in the privity of contract with the CPA.
- 1. 2.	For a plaintiff to prevail in a common law negligent misrepresentation action, the plaintiff must prove that the plaintiff justifiably relied on the misrepresentations.
- 1. 2.	In a suit for common law fraud based on its unqualified opinion on materially false financial statements, a CPA firm can assert, as a defense, a disclaimer contained in the engagement letter.
- 1. 2.	For a plaintiff to prevail in a common law negligent misrepresentation action, the plaintiff must prove that the defendant made the misrepresentations with a reckless disregard for the truth.
- 1. 2.	For a plaintiff to prevail in a common law negligent misrepresentation action, the plaintiff must prove that the misrepresentations concerned opinion.
- 1. 2.	For a plaintiff to prevail in a common law negligent misrepresentation action, the plaintiff must prove that the misrepresentations were in writing.
- 1. 2.	In a suit for common law fraud based on its unqualified opinion on materially false financial statements, a CPA firm can assert, as a defense, contributory negligence on the part of the client.
- 1. 2.	In a suit for common law fraud based on its unqualified opinion on materially false financial statements, a CPA firm can assert, as a defense, a lack of scienter.
- 1. 2.	A CPA has met the required standard of care in conducting an audit of a client's financial statements if the CPA conducted the audit with the same skill and care expected of an ordinarily prudent CPA under the circumstances.
- 1. 2.	A CPA has met the required standard of care in conducting an audit of a client's financial statements when the audit was conducted to discover all acts of fraud.
- 1. 2.	While performing the audit, a CPA failed to discover irregularities that later caused stockholders to suffer substantial losses. For the CPA to be liable under common law negligence, the stockholders must prove, at a minimum, that the CPA knew of the irregularities.
- 1. 2.	While performing the audit, a CPA failed to discover irregularities that later caused stockholders to suffer substantial losses. For the CPA to be liable under common law negligence, the stockholders must prove, at a minimum, that the CPA failed to exercise due care.

Answer rating: 100% (QA)

1 True A CPA who negligently gives an opinion on an audit of a clients financial statements is generally liable only to those third parties who are in privity of contract with the CPA Privity of contr... View the full answer