Auditor Legal Liability

Quiz
•
Business
•
University
•
Hard
Mohd Faizal Jamaludin
Used 241+ times
FREE Resource
12 questions
Show all answers
1.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
An example of a breach of contract would likely include
an auditor's refusal to return the client's general ledger book until the client paid last year's audit fees.
an auditing firm's failure to complete an audit on the agreed-upon date because the firm had a backlog of other work which was more lucrative.
a bank's claim that an auditor had a duty to uncover material errors in financial statements that had been relied on in making a loan.
an auditor's claim that the client staff is unqualified.
2.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
Privity of contract exists between
auditor and third parties.
auditor and client attorney.
auditor and the federal government.
auditor and client.
3.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
An individual who is not party to the contract between an auditor and the client, but who is known by both and is intended to receive certain benefits from the contract is known as
a tort.
a third-party beneficiary.
a common law inheritor.
a third party.
4.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
Fraud occurs when
a misstatement is made and there is both knowledge of its falsity and the intent to deceive.
the auditor lacks even slight care in the performance in performing the audit.
the auditor has an absence of reasonable care in the performance of the audit.
a misstatement is made and there is knowledge of its falsity but no intent to deceive.
5.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
A third-party beneficiary is one which
does not have privity of contract and is unknown to the contracting parties.
may establish legal standing before the court after a contract has been consummated.
does not have privity of contract, but is known to the contracting parties and intended to benefit under the contract.
has failed to establish legal standing before the court.
6.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
The laws that have been developed through court decisions are called
common laws.
civil laws.
statutory laws.
criminal laws.
7.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
Which of the following is an accurate statement regarding audit risk, audit failure, and business failure?
Audit risk is always avoidable if the audit is conducted in accordance with generally accepted auditing standards.
A business failure will always result in an audit failure.
Because auditors gather evidence on a test basis, and because well-concealed frauds are difficult to detect, audit risk is unavoidable.
Legal precedent makes it easy to determine who has the right to recover losses in the event of an audit failure.
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