Accountant Liability 2 of 3 (27)

Question 1

Actual Fraud

Answer 1

Making false statements with scienter or the knowledge of their falsity, such as expressing an unmodified opinion on financial statements that the auditor knows to be materially misstated.

Question 2

Constructive Fraud

Answer 2

Making false statements as a result of gross negligence or reckless disregard for the truth, not knowing if the statements are true or false, such as an auditor expressing an opinion in an audit report on financial statements of which an audit was not actually performed.

Question 3

Scienter

Answer 3

The intent to mislead, deceive, manipulate, or defraud with the accountant’s knowledge of the falsity.