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CPA > CPA - REGULATION PERSONAL > Flashcards

CPA - REGULATION PERSONAL Flashcards

1
Q

What is JEEP?

A

Joint Ethics Enforcement Program

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2
Q

Who handles ethical complaints with national implications when it comes to CPAs?

A

The AICPA

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3
Q

What is scienter?

A

Whether or not a person or company has a “guilty mind”

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4
Q

Who is generally impacted in a fraud case?

A

“reasonably foreseeable” victims

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5
Q

What element must be proven in constructive fraud?

A

Gross negligence

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6
Q

What is the majority (restatement) view?

A

Limiting an accountant’s liability to a limited class of actually foreseen users

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7
Q

What is the “Ultramares” rule?

A

An accountant’s liability is only to those they are in privity of contract with

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8
Q

How can a CPA be convicted of common law fraud?

A

With knowledge of misstatements or recklessly making the misstatements

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9
Q

When does actual fraud occur?

A

An accountant makes a statement they know is false

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10
Q

When does constructive fraud occur?

A

An accountant makes a statement they have no reasonable grounds to believe is true

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11
Q

What are the two key provisions of the Foreign Corrupt Practices Act (FCPA)?

A
  1. Anti-bribery 2. books and records and internal accounting controls
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12
Q

What does RICO stand for?

A

Racketeer Influenced Corrupt Organizations Act

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13
Q

How long must audit and review papers be retained for?

A

7 years

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14
Q

When is disclosing a client’s name not acceptable?

A

When they are experiencing financial difficulties (i.e. bankruptcy)

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15
Q

What does 26 USC Sec. 7525 provide?

A

Modest testimonial privilege to clients of all tax advisers- only for noncriminal matters- exempts written tax shelter advice

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16
Q

What does GAPP stand for?

A

Generally Accepted Privacy Principles

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17
Q

What is a bilateral contract?

A

A promise in exchange for a promise creating a contract

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18
Q

What is an executory contract?

A

One not fully performed

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19
Q

What does common law cover?

A
  • real estate- services (employment)
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20
Q

What does the Uniform Commercial Code (UCC) cover?

A
  • Sales of goods- Goods and services combined
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21
Q

What methods can express contracts be in?

A

Oral or written

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22
Q

What are implied-in-fact contracts?

A

Agreeing to a service before payment is determined

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23
Q

What is a unilateral contract?

A

A promise in exchange for performance

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24
Q

Executed contract

A

One that is fully performed

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25
Q

What is the “mirror image” rule?

A

If a response is not a mirror image acceptance of an offer, it is a rejection and a counteroffer (common law)

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26
Q

What are most general business advertisements?

A

Simply invitations to trade

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27
Q

What are the three main elements of a contract?

A

offer, acceptance, and consideration

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28
Q

What do you need for an offer to be valid under Common Law?

A
  1. present intent - objective basis2. language - all details
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29
Q

What do you need for an offer to be valid under UCC?

A
  1. present intent - objective basis2. language - subject matter
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30
Q

What brings termination?

A
  • rejection- counteroffer - revocation*All effective upon receipt
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31
Q

What other things bring termination?

A
  • death of offeror- bankruptcy- illegality
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32
Q

What is an option?

A
  • paid-for offer- consideration required- irrevocable
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33
Q

What are the requirements for a Merchant Firm Offer (UCC)?

A
  • writing- signed- by a merchant - states it will be kept open (max three months)*need an option over three months
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34
Q

What happens with a conditional acceptance?

A

Counter offer and rejection (usually prepositional phrases)

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35
Q

When no means are given and the same or faster method of communication is used, when is the acceptance of an offer effective under UCC?

A

When properly mailed - Mailbox Rule applies

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36
Q

When no means are given and the same method of communication is used, when is the acceptance of an offer effective under Common Law?

A

When properly mailed - Mailbox Rule Applies

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37
Q

When no means are given and a slower method of communication is used, when is the acceptance of an offer effective under UCC?

A

When received if the offer is still open

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38
Q

When no means are given and a different method of communication is used, when is the acceptance of an offer effective under Common Law?

A

When received if the offer is still open

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39
Q

When specified means (stipulated) are given and specified means are used, when is the acceptance of an offer effective under UCC and Common Law?

A

Mailbox Rule

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40
Q

When specified means (stipulated) are given and specified means are not used, when is the acceptance of an offer effective under UCC and Common Law?

A

counteroffer and rejection

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41
Q

When prompt shipment is the offer and the proper goods are shipped, when is the acceptance of an offer effective under UCC?

A

Upon shipment

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42
Q

When prompt shipment is the offer and improper goods are shipped, when is the acceptance of an offer effective under UCC?

A

breach and acceptance

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43
Q

What constitutes consideration?

A

A promise to do something new or something not already obligated to do

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44
Q

What is the definition of consideration?

A

Doing what you’re free not to do or not doing what you are free to do

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45
Q

Why are charitable subscriptions a consideration issue?

A

Enforceable despite lack of detriment on one side

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46
Q

What’s wrong with preexisting obligations when it comes to consideration?

A

Not sufficient consideration

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47
Q

When is a modification enforceable?

A
  • UCC - in good faith- Common Law - with additional consideration
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48
Q

What is a liquidated debt?

A

The terms are clear as far as payment, interest, etc. (i.e. a mortgage)

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49
Q

What is a un-liquidated debt?

A

You acknowledge you owe a debt, but disagree on the amount

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50
Q

What is the standard statute of limitations on contracts?

A

four years

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51
Q

What does the parol evidence rule prohibit?

A

The introduction of evidence that additional terms were agreed upon before the contract was signed

52
Q

Over what dollar amount must sale of goods contracts (UCC) be in writing?

A

$500 or more

53
Q

When must the sale of land be in writing?

A

Always

54
Q

For what time period must a services contract always be in writing?

A

1 year or greater

55
Q

What satisfies the Statute of Frauds?

A
  • Record- Signature - Sufficient terms
56
Q

What are the requirements for a merchant’s confirmation memo?

A
  • writing (record)- signed by one of the merchants- underlying oral agreement- two merchants required
57
Q

What are the UCC exceptions under the Statute of Frauds?

A
  • Goods actually accepted - buyer- Payments actually received - seller- Specially manufactured - Admission - in any proceeding while under oath
58
Q

When can a minor disaffirm a contract?

A

While still a minor and for a reasonable time after reaching the age of majority (voidable contract)

59
Q

What happens if a buyer accepts an offer containing an immaterial unilateral mistake?

A

The contract is still valid

60
Q

How can a minor upon turning 18 ratify a contract?

A

By specifically promising to be bound by the entire contract, either written or orally

61
Q

How must an adult perform with a contract with a minor?

A

They are bound to it and must perform regardless

62
Q

What is duress?

A

Threats that overcome one’s free will inducing a person to assent to a contract

63
Q

What four proofs from the defendant are required in a common law fraud action?

A
  • a false statement of fact or misrepresentation- knowledge of the false statement - reliance by the plaintiff- a loss suffered by the plaintiff
64
Q

How are future contracts treated if a person is declared insane?

A

All void

65
Q

What are the requirements for being (not declared) insane (voidable contracts)?

A
  • don’t understand the nature of contracts- did not understand the effect of a specific contract
66
Q

What happens to a contract if you are drunk to the extent of mental incapacity?

A

Voidable

67
Q

What is the defense to a unilateral mistake of fact?

A

No defense

68
Q

What is the defense to a unilateral mistake in computation?

A

Defense is within range or offeree knows

69
Q

What happens under a mutual mistake of fact?

A

Valid defense

70
Q

What do you need under innocent misrepresentation to rescind a contract?

A
  • a basis of the bargain- fact or promise
71
Q

What must occur to use fraud as a defense to rescind a contract?

A
  • material misstatement/basis of bargain- must prove knowledge- must prove intent to defraud- (can be rewarded punitive damages)
72
Q

What happens under an accord and satisfaction?

A

Parties agree to accept a difference performance and the substituted performance is performed

73
Q

What is a mutual rescission?

A

Both parties agree to the discharge of their obligations

74
Q

What happens if a service becomes illegal to perform?

A

Discharge of a party’s duties

75
Q

What is a rescission?

A

An undoing of a contract

76
Q

What at the three types of conditions that can be present in a contract?

A
  • conditions precedent- conditions concurrent- conditions subsequent
77
Q

What happens when conditions fail in a contract?

A

Performance is discharged

78
Q

What are the tests under substantial performance?

A
  • Is it for practical purposes just as good- Was it done in good faith- Can the party be compensated
79
Q

What is anticipatory repudiation?

A

Breach before performance is due

80
Q

When are nominal damages awarded?

A

Under a technical breach

81
Q

What are compensatory damages?

A

Return parties to original positions as if there was no breach

82
Q

What are liquidated damages?

A

Agreed-upon in advance damages; alternative to compensatory damages

83
Q

What is specific performance?

A

Requiring breaching party to perform; used against seller in land contract

84
Q

What rights do incidental beneficiaries have under a contract?

A

They don’t. They may not sue to enforce contracts.

85
Q

What two things make a creditor beneficiary?

A
  1. One party to a contract in question owed the creditor money2. The contract in question was made specifically to satisfy the debt
86
Q

What is not normally transferred under delegation?

A

liability

87
Q

What does the Statute of Frauds require under the UCC?

A
  • the signature of the person to be charged- the quantity of goods ordered- written evidence of an agreement
88
Q

What are the open terms under the UCC?

A

Price, payment, and delivery

89
Q

What if you ship the wrong thing under UCC without advanced notice?

A

Breach and acceptance at the same time

90
Q

What does shipment mean under the UCC?

A

Acceptance

91
Q

What does conditional acceptance result in under common law and UCC?

A

A counter offer

92
Q

If a non-merchant accepts with additional terms what happens?

A

Contract without additional terms

93
Q

If a merchant accepts with additional terms what happens?

A

Have to check if it is material, there is an objection, or the offer is limited. If immaterial, it is usually included.

94
Q

When does risk of loss pass from seller to buyer in a F.O.B. place of shipment contract?

A

When the goods are placed in possession of the carrier

95
Q

When does risk of loss pass from seller to buyer in a F.O.B. buyer’s place of business contract?

A

When the goods are delivered to the buyer’s destination

96
Q

When does identification occur on existing goods?

A

At the time of contracting

97
Q

When are future and fungible goods identified?

A

When the goods are shipped, marked, or otherwise designated for the buyer

98
Q

What does COD mean?

A

Collect or cash on delivery

99
Q

What are the rules under CF?

A
  • lump sum; cost and freight- risk-buyer upon delivery to carrier - title-buyer upon delivery to carrier- expense-seller includes cost of freight in contract price
100
Q

What can a thief never do with a title?

A

Pass good title

101
Q

What are the three types of express warranties under the UCC?

A
  • Affirmations of fact or promises- Description of the goods- Sample or model
102
Q

What implied warranties does the UCC give the buyer (unless disclaimed by the seller)?

A
  • Fitness for a particular purpose- Merchantability - The usage of trade
103
Q

How is an express warranty created?

A

Affirmation of fact or promise of performance

104
Q

What is the restriction and disclaimer for an express warranty?

A
  • Must be part of the basis of the bargain- Can’t make a disclaimer inconsistent with a express warranty
105
Q

How is an implied warranty of merchantability created?

A
  • Given in every sale of goods by a merchant
106
Q

What is the restriction for an implied warranty of merchantability?

A
  • Only given by merchants
107
Q

What is the disclaimer for an implied warranty of merchantability?

A
  • If written, must be conspicuous - Must use disclaimer of quality or use “merchantability” or general disclaimer “as is” or “with all faults”
108
Q

How is an implied warranty of fitness for a particular purpose created?

A
  • The seller knows of the buyer’s reliance for particular use
109
Q

What is the restriction for an implied warranty of fitness for a particular purpose?

A

Seller must have knowledge - buyer must rely

110
Q

What is the disclaimer for an implied warranty of fitness for a particular purpose?

A
  • Must be in writing- Must be conspicuous - Must be clear there are no warranties - Also disclaimed with “as is” or “with all faults”
111
Q

When is a warranty of title created?

A

Given in every sale

112
Q

What is the restriction on warranty of title?

A

Doesn’t apply in circumstances where apparent warranty is not given

113
Q

What is the disclaimer on warranty of title?

A

Must state there is no warranty of title

114
Q

What are the rules under product liability - strict tort liability?

A
  1. Defective condition unreasonably dangerous2. Defendant in the business of using, selling, or manufacturing the product3. Condition of product is the same*(knowledge of the defect is required for punitive damages)
115
Q

What is wrong with a disclaimer of warranty for personal injury?

A

It violates public policy

116
Q

What does a C.O.D. (cash on delivery) contract not permit before payment is made?

A

Inspection of the goods, but can be later rejected if nonconforming

117
Q

What rights are available on a buyer when the seller commits an anticipatory breach of contract?`

A
  • demand assurance of performance- cancel the contract
118
Q

When can a revocation of acceptance occur?

A

After acceptance; must materially impair value and either a defect non-discoverable or a promise to cure

119
Q

Right to cure

A

Upon notification by the buyer, prior to performance date, Seller has the right to get conforming goods to the buyer

120
Q

When can a seller stop delivery under Article II?

A
  • insolvency- advance breach by buyer
121
Q

When can a seller recover the resale price under Article II?

A
  • the buyer fails to take the goods (k price - resale price + incidental damages expenses saved)
122
Q

When can a seller recover the market price under Article II?

A
  • the buyer fails to take the goods (k price - market price + incidental damages expenses saved)
123
Q

When can a seller recover for action for price under Article II?

A
  • specially manufactured goods (K price + incidental damages - expenses saved)
124
Q

When can a seller recover for lost profit under Article II?

A
  • anticipatory repudiation (profits + incidental damages - salvage value)
125
Q

When can a buyer recover under specific performance (replevin / identification)?

A
  • For rare, unique goods - buyer gets goods (incidentals)
126
Q

When can a buyer recover the cover price?

A
  • the seller fails to deliver (cover price - K price + incidentals + consequential damages - expenses saved)
127
Q

When can a buyer recover the market price?

A
  • the seller fails to deliver (market price - K price + incidentals + consequential damages - expenses saved)

CPA (16 decks)

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