Multiply Choice
1. A CPA’s duty of due care to a client most likely will be breached when a CPA:
(a) Gives a client an oral instead of a written report
(b) Gives a client incorrect advice based on an honest error of judgment
(c) Fails to give tax advice that saves the client money
(d) Fails to follow GAAS

2. One of the elements necessary to hold a CPA liable to a client for conducting an audit negligently is that the CPA:
(a) Acted with scienter or guilty knowledge
(b) Was a fiduciary of the client?
(c) Failed to exercise due care
(d) Executed an engagement letter

3. One of the elements necessary to hold a CPA liable under §10(b) is that the CPA
(a) Acted with scienter or guilty knowledge
(b) Was a fiduciary of the client?
(c) Failed to exercise due care
(d) Executed an engagement letter

4. An accountant has a fiduciary duty:
(a) To a client when conducting an audit
(b) To an investor who buys stock in company the accountant has audited
(c) To any third party that the accountant knows will be relying on an audit
(d) Only for services that go beyond routine accounting work

5. Accountants who commit fraud in the preparation of financial statements are liable to any third party who uses those statements if:
(a) That person is a foreseeable user
(b) The accountant knows that person’s identity
(c) It is foreseeable that that person will receive the financial statements
(d) That person is in the same class as someone who the accountant knew would rely on the statements