SOLVED

41) Which of the following standards is used in applying the reasonably foreseeable users test regarding accountant liability to third-parties? A) Fraud B) Negligence C) Privity D) Breach of contract E) Strict product liability 42) As set forth in the case in the text, Bily v. Arthur Young & Co., which of the following is true regarding auditor liability to third parties under the Restatement rule? A) An auditor retained to conduct an annual audit and to furnish an opinion for no particular purpose generally undertakes a duty only to directors of the company who provide loans to the company. B) An auditor retained to conduct an annual audit and to furnish an opinion for no particular purpose does undertake a duty to any foreseeable third party users. C) An auditor retained to conduct an annual audit and to furnish an opinion for no particular purpose undertakes a duty only to third parties who are financial institutions. D) An auditor retained to conduct an annual audit and to furnish an opinion for no particular purpose generally undertakes no duty to third parties except for financial institutions and also directors who provide loans to a company. E) An auditor retained to conduct an annual audit and to furnish an opinion for no particular purpose generally undertakes no duty to third parties. 43) The various documents used and developed during an audit, including notes, calculations, and memorandums, are called which of the following? A) Accounting memoranda. B) Auditing copies. C) Client documentation. D) Calculation documents. E) Working papers. 44) In negligence cases involving the accountant’s work, which of the following is true regarding the use of working papers? A) Working papers may be used as evidence in negligence cases only if the accountant failed to provide the client with copies of them. B) Working papers cannot be used as evidence in negligence cases. C) Working papers can be used as evidence in negligence cases only if a bank is the plaintiff. D) Working papers can be used as evidence in negligence cases. E) Working papers can be used as evidence in negligence cases only if a non-corporate plaintiff is involved. 45) Which statement accurately describes the requirements regarding working papers under the Sarbanes-Oxley Act of 2002? A) Accountants must maintain working papers for ten years starting with the end of the fiscal period in which the audit was conducted. B) The act does not require that accountants maintain working papers. C) Accountants must maintain working papers for five years starting with the end of the fiscal period in which the audit was conducted. D) Accountants must maintain working papers for one year starting on the last day of the audit. E) Accountants must maintain working papers for seven years starting on the last day of the audit. Â Â