Select the necessary words from the list of possibilities to complete the following statements. 2 Statements Answer The 1. auditors' review for subsequent events. case, a landmark case of liability under the Securities Act of 1933, involved criticism of the A document including audited financial statements that must be filed with the SEC by any company intending to 2. sell its securities to the public through the mails or interstate commerce is called a 3. An is the written contract summarizing the relationship between the auditors and the client. The 4. statements. case was a landmark case regarding the accountant's liability for unaudited financial 5. Gross negligence is also referred to as

Select the necessary words from the list of possibilities to complete the following statements. 2 Statements Answer The 1. auditors' review for subsequent events. case, a landmark case of liability under the Securities Act of 1933, involved criticism of the A document including audited financial statements that must be filed with the SEC by any company intending to 2. sell its securities to the public through the mails or interstate commerce is called a 3. An is the written contract summarizing the relationship between the auditors and the client. The 4. statements. case was a landmark case regarding the accountant's liability for unaudited financial 5. Gross negligence is also referred to as

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter10: Auditing Cash, Marketable Securities, And Complex Financial Instruments

Section: Chapter Questions

Problem 32RQSC

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Which of the following statements regarding auditors’ liability under the Securities Act of1933 is not true?a. The act relates to the initial issuance of securities to the public, normally through an initial public offering.b. Auditors’ liability arises because of audited financial information filed with the SEC.c. Third parties must demonstrate that they relied on misstated financial statements thatwere examined by auditors.d. Auditors may be liable if they are found to have engaged in ordinary negligence.
Select the necessary words from the list of possibilities to complete the following statements. 1 Statements Answer When CPAS are associated with 1. the CPAS' services and believe that the accountants are acting as auditors. a possibility exists that the client may misinterpret the extent of Under the Securities Act of 1933, initial purchasers of securities may sue the auditors for misleading audited 2. financial statements and need not prove that they relied on the financial statements. The burden of proof is on the auditors to prove that they were in the performance of their work. 3. Unwritten law that has developed through court decisions is referred to as 4. When damage to another is directly attributable to a wrongdoer's act, is said to exist. of financial statements involves the performance of limited investigative procedures that provide a basis for the expression of limited assurance that there are no material departures from generally accepted accounting principles. 5.
Which of the following is not true of a registration statement? A . It helps the SEC make judgments about the worth of securities. B. It contains financial statements certified by independent public accountants. C. It provides information about the management of the company. D. It is different for different types of companies that offer securities for sale.
Match each of the numbered descriptions 1 through 7 with the term or phrase it best reflects. Indicate your answer by writing the letter A through G for the term or phrase in the blank provided. A. Ethics B. Fraud triangle C. Prevention D. Internal controls E. Sarbanes-Oxley Act 1. Requires the SEC to pay whistleblowers. 2. Examines whether financial statements are prepared using GAAP; it does not ensure absolute accuracy of the statements. 3. Requires documentation and verification of internal controls and increases emphasis on internal control effectiveness. 4. Procedures set up to protect company property and equipment, ensure reliable accounting, promote efficiency, and encourage adherence to policies. 5. A less expensive and more effective means to stop fraud. 6. Three factors push a person to commit fraud: opportunity, pressure, and rationalization. 7. Beliefs that distinguish right from wrong.
C. Give an example and explain securities fraud in violation of the Securities Act of ‘33. D. Explain how Enron “cooked the books” with two of its accounting practices
Select the necessary words from the list of possibilities to complete the following statements. 1. Statements The case, a landmark case of liability under the Securities Act of 1933, involved criticism of the auditors' review for subsequent events. Under the Securities Act of 1933, initial purchasers of securities may sue the auditors for misleading audited 2. financial statements and need not prove that they relied on the financial statements. The burden of proof is on the auditors to prove that they were in the performance of their work. A of financial statements involves the performance of limited investigative procedures that provide 3. a basis for the expression of limited assurance that there are no material departures from generally accepted accounting principles. 4. When damage to another is directly attributable to a wrongdoer's act, is said to exist. 5. A document including audited financial statements that must be filed with the SEC by any company intending to sell its…
The Securities Act of 1933 and Securities Exchange Act of 1934 containa. Civil liability provisions applicable to auditors. b. Criminal liability provisions applicable to auditors. c. Neither a nor b. d. Both a and b.
Choose the correct. What is a registration statement?a. A statement that must be filed with the SEC before a company can begin an initial offering of securities to the public.b. A required filing with the SEC before a large amount of stock can be obtained by an inside party.c. An annual filing made with the SEC.d. A filing made by a company with the SEC to indicate that a significant change has occurred.
Under the Private Securities Litigation Reform Act (the Act), independent auditors are required to firsta. Report in writing all instances of noncompliance with the Act to the client’s board of directors.b. Report to the SEC all instances of noncompliance with the Act they believe have a material effect on financial statements if the board of directors does not first report to the SEC.c. Report clearly inconsequential noncompliance with the Act to the audit committee of the client’s board of directors.d. Resign from the audit engagement and report the instances of noncompliance with the Act to the SEC.
SEC Independence and Nonaudit Services. Is independence impaired on these SEC filingaudits according to SEC independence rules regarding nonaudit services?a. CPA Dakota Tidrick is a staff assistant II auditor on the Section Co. audit. Upon theaudit completion date in January, Tidrick drafted the balance sheet, income statement,comprehensive income statement, statement of cash flows, and notes for review by theengagement partner before the auditors’ report was finalized.b. CPA Mel Carnes is a manager in the firm’s consulting division. He spent 100 hours withthe Section Co. audit client on an accounts payable information system study, whichinvolved selecting the preferred software and supervising Section Co.’s employees instartup operations.
Which of the following is a reason that an entity may receive an audit? Select the best response and then click "Submit". O The entity has publicly traded stock. O The entity is required by regulators. O The entity is required by its lenders. Management wants assurance around accounting procedures and to reduce the risk of fraud. O All of the above