Truth Accounting,Inc

question 35

Multiple Choice

Truth Accounting,Inc.has been retained to perform an audit for a client.In doing the Audit,it fails to discover an embezzlement that has gone on for two years by the client's chief financial officer.The reason that Truth Accounting,Inc.failed to discover the embezzlement was because the auditor was in a rush to finish due to being too busy,so she did not conduct a reasonable investigation.Soon after the audit,the embezzlement is discovered,and the client goes bankrupt.If Truth Accounting,Inc.is sued,which of the following theories of liability apply?

• A) the Ultramares doctrine
• B) Section 552 of the Restatement (Second) of Torts
• C) negligence
• D) the foreseeability standard
• E) strict liability

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Definitions:

Tympanic Membrane

Also known as the eardrum, it is a thin membrane that separates the outer ear from the middle ear and vibrates in response to sound waves.

Static Equilibrium

A state where an object is at rest, and the sum of all forces and torques acting on it is zero.

Macula

A small, specialized area on the retina responsible for sharp, detailed central vision.

Utricle

A part of the inner ear involved in sensing linear accelerations and head-tilts in the horizontal plane, contributing to balance and spatial orientation.