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Yaeger REG > Mod 23 Key Terms > Flashcards

Mod 23 Key Terms Flashcards

0
Q

Much common law has now been codified to…

A

State statutes

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1
Q

Common law

A

Law that has historically been established by judicial precedents

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2
Q

Common law is the source of liability to…

A

Clients and third parties (not covered by securities laws)

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3
Q

Constructive fraud

A

Failure to use even slight care

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4
Q

Constructive fraud is referred to as…

A

Gross negligence

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5
Q

Contributory negligence

A

Negligence on the part of the plaintiff that contributed to the party’s losses

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6
Q

Contributory negligence will typically…

A

Some or all of the defendant’s damages

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7
Q

Due diligence is the standard of care under…

A

Filings under Securities Act of 1933

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8
Q

To establish due diligence a CPA must…

A

1 Have made reasonable investigation

2 Have reasonable grounds to believe

3 Did believe that the financial statement was not misleading

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9
Q

Fraud 2 definitions

A

Misrepresentation intended to mislead another party or

a representation made with reckless regard for its truth

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10
Q

Joint and several liability, is a concept of liability that is similar to joint liability except that if…

A

All the judgment is recovered from one defendant, that party may attempt to collect from other defendants proportionate shares

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11
Q

Join Ethics Enforcement Program (JEEP)

A

Joint program of the AICPA and state CPA societies to jointly investigate ethics violations

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12
Q

Joint liability, is a liability concept in which…

A

Any joint defendant may be forced to pay the entire amount

Of judgement

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13
Q

Ex. Of joint liability

A

Bank files suit against both CPA firm and management for
misleading FS

The bank may recover entire amount from management or CPA firm

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14
Q

Negligence

A

Failure to perform with level of skill and judgment possessed by
A typical professional

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15
Q

Negligence is often referred to as…

A

Ordinary negligence

16
Q

Primary beneficiary

A

Party other than the client who primarily benefits from contracted services provided by the CPA

17
Q

Primary beneficiary example

A

If CPA is aware that an audit is being performed at request of client’s bank, the bank is a primary beneficiary of contract btw/CPA and client

18
Q

Under common law primary beneficiary has…

A

Same rights as client

19
Q

Privileged communication

A

Communication that is not subject to disclosure in court or administrative proceedings

20
Q

Privilege must be established by…

2) and generally communication between accountant and client is…

A

Law

2) not privileged

21
Q

Privity, 2 part definition

A

1 Mutual relationship established between parties

2 Typically established by contract

22
Q

The client and third party beneficiaries are in privity with CPA in…

A

Contract to provide services

23
Q

Public Company Accounting Oversight Board (PCAOB)

A

Nonprofit organization created by SOX to oversee audits of public companies

24
Q

Public Company Accounting Reform and Investor Protection (SOX) Act

A

Act that set new set of enhanced standards for public company
boards, management and public accounting firms

25
Q

Racketeer Influenced and Corrupt Organization (RICO) Act

A

Act designed to allow prosecution of organized criminals

26
Q

The RICO Act was also used to pursue…

A

CPA firms who engaged in multiple instances (patterns) of wrongful
Acts

27
Q

Civil actions under the RICO Act can result in…

A

Recovery of Treble damages

28
Q

Securities Act of 1933

A

Federal securities act that covers initial registration of securities

29
Q

Securities Exchange Act of 1934

A

Federal securities act that covers the secondary purchase and
Sale of securities

30
Q

Several liability, is a concept of liability in which…

A

Joint defendants are responsible only for their proportionate share
Of the judgement

31
Q

State boards of accountancy

A

State boards that regulate the practice of public accountancy
In state or jurisdiction

32
Q

All individual CPAs and CPA firms must be licensed to…

A

Practice in states where they practice

33
Q

Statements on Standards for Tax Services

A

AICPA standards for CPAs that perform tax services for clients

34
Q

Treasury Department Circular 230

A

Regulatory requirements regarding the authority to practice

Before the Internal Revenue Service

35
Q

US Securities and Exchange Commission (SEC)

A

Federal agency with primary responsibility for enforcing the federal securities laws and regulating the securities industry

Yaeger REG (77 decks)

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