ACC 403 Week 4 quiz 3

Topics: Common law, Auditing, Audit Pages: 6 (1008 words) Published: February 15, 2015
ACC 403 Week 4 quiz 3
Question 1

If an auditor fails to fulfill a certain requirement in the contract, they may be guilty of: Answer

Selected Answer:
  
breach of contract.
Correct Answer:
  
breach of contract.

Question 2

The assessment against a defendant of that portion of the damage caused by the defendant's negligence is called: Answer

Selected Answer:
  
separate and proportionate liability.
Correct Answer:
  
separate and proportionate liability.

Question 3

In connection with the audit of financial statements, an independent auditor could be responsible for failure to detect a material fraud if: Answer

Selected Answer:
  
statistical sampling techniques were not used on the audit engagement. Correct Answer:
  
the auditor planned the audit in a negligent manner.

Question 4

Which of the following most accurately describes constructive fraud? Answer

Selected Answer:
  
Extreme or unusual negligence without the intent to deceive
Correct Answer:
  
Extreme or unusual negligence without the intent to deceive

Question 5

Which of the following auditor's defenses usually means nonreliance on the financial statements by the user? Answer

Selected Answer:
  
Nonnegligent performance
Correct Answer:
  
Absence of causal connections

Question 6

The preferred defense in third party suits is:
Answer

Selected Answer:
  
nonnegligent performance.
Correct Answer:
  
nonnegligent performance.

Question 7

A broad interpretation of the rights of third-party beneficiaries holds that users that the auditor should have been able to foresee as being likely users of financial statements have the same rights as those with privity of contract. This is known as the concept of: Answer

Selected Answer:
  
foreseeable users.
Correct Answer:
  
foreseeable users.

Question 8

The expectation gap:
Answer

Selected Answer:
  
exists because auditors guarantee the accuracy of the financial statements. Correct Answer:
  
often results in unwarranted lawsuits against the auditor.

Question 9

In the auditing environment, failure to meet auditing standards is often: Answer

Selected Answer:
  
a suggestion of negligence.
Correct Answer:
  
conclusive evidence of negligence.

Question 10

The principal issue to be resolved in cases involving alleged negligence is usually: Answer

Selected Answer:
  
the amount of the damages suffered by plaintiff.
Correct Answer:
  
the level of care exercised by the CPA.

Question 11

Privity of contract exists between:
Answer

Selected Answer:
  
auditor and client.
Correct Answer:
  
auditor and client.

Question 12

The principal issue in cases involving alleged negligence is usually: Answer

Selected Answer:
  
the level of care required.
Correct Answer:
  
the level of care required.

Question 13

Laws that have been passed by the U.S. Congress and other governmental units are: Answer

Selected Answer:
  
common laws.
Correct Answer:
  
statutory laws.

Question 14

"Absence of reasonable care that can be expected of a person in a set of circumstances" defines: Answer

Selected Answer:
  
ordinary negligence.
Correct Answer:
  
ordinary negligence.

Question 15
2 out of 2 points

The standard of due care to which the auditor is expected to adhere to in the performance of the audit is referred to as the: Answer

Selected Answer:
  
prudent person concept.
Correct Answer:
  
prudent person concept.

Question 16

Which of the following is the auditor least likely to do when aware of an illegal act? Answer

Selected Answer:
  ...
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