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Auditing Chapter Two

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Auditing Chapter Two
(TCO 4) To succeed in an action against the auditor, the client must be able to show that:

Student Answer: the auditor was fraudulent. the auditor was grossly negligent. there was a written contract. there is a close causal connection between the auditor's behavior and the damages suffered by the client. Instructor Explanation: Page 121

Points Received: 2 of 2 Comments:

2. Question : (TCO 4) The principal issue to be resolved in cases involving alleged negligence is usually:

Student Answer: the amount of the damages suffered by plaintiff. whether to impose punitive damages on defendant. the level of care exercised by the CPA. whether defendant was involved in fraud. Instructor Explanation: Page 119

Points Received: 2 of 2 Comments:

3. Question : (TCO 4) A third-party beneficiary is one which:

Student Answer: has failed to establish legal standing before the court does not have privity of contract and is unknown to the contracting parties. does not have privity of contract, but is known to the contracting parties and intended to benefit under the contract. may establish legal standing before the court after a contract has been consummated. Instructor Explanation: Page 121

Points Received: 2 of 2 Comments:

4. Question : (TCO 4) The objective of the ordinary audit of financial statements is the expression of an opinion on:

Student Answer: the fairness of the financial statements. the accuracy of the financial statements. the accuracy of the annual report. the accuracy of the annual report. Instructor Explanation: Page 142

Points Received: 2 of 2 Comments:

5. Question : (TCO 4) The responsibility for adopting sound accounting policies and maintaining adequate
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