Cpa Exam

Front 1

Foreseen Party

Back 1

third party who accountant knew would rely on financial statements, or member of limited class that accountant knew would rely on financial statements, for specified transaction

Front 2

Foreseeable Party

Back 2

any party that accountant could reasonably foresee would receive financial statements and use them

Front 3

Majority Rule

Back 3

-accountant is liable to foreseen third parties for negligence
-accountant not liable to merely forseeable parties for negligence

Front 4

Ultramares decision

Back 4

leading case in which accountants held liable only to parties for whose primary benefit financial statements are intended

Front 5

To establish common law liability against an accountant based on negligence, you must prove ...

Back 5

1) the accountant had the duty to exercise due care
2) the accountant breached the duty of due care
3) damage or loss resulted
4) a casual relationship exists between the fault of the accountant and the resulting damages

Front 6

To establish common law liability against an accountant based on fraud, you must prove ...

Back 6

1) misrepresentation of a material fact or the accountant's expert opinion
2) scienter, shown by either an intent to mislead or reckless disregard for the truth
3) reasonable or justifiable reliance by injured party
4) actual damages resulted

Front 7

A CPA's liability for constructive fraud (gross negligence) is established by the following elements ...

Back 7

1) misrepresentation of a material fact
2) reckless disregard for the truth
3) reasonable reliance by the injured party
4) actual damages

Front 8

Implied

Back 8

accountant owes duty in contract to perform in nonnegligent manner

Front 9

Express

Back 9

accountant owes duty to perform under terms of contract