Sumanthra, an Accountant, Prepared Financial Statements for ZeeTech Ltd

question 128

Multiple Choice

Sumanthra, an accountant, prepared financial statements for ZeeTech Ltd. A cutting edge technology company, ZeeTech was actively seeking private investment in order to finance a new electronics device. Despite the fact that Sumanthra followed Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS) , the statements she prepared were misleading. Arif and Alena, both potential investors, relied on the statements Sumanthra had prepared. As a result of their reliance, Arif and Alena both invested in ZeeTech and lost a considerable sum of money. Independently, Arif and Alena decided to sue Sumanthra for their financial loss. Which of the following is true?

• A) Sumanthra will not escape liability because accountants are automatically liable for losses arising from the use of financial statements they prepare.
• B) Sumanthra will not escape liability simply because she followed GAAP and IFRS.
• C) Sumanthra has nothing to worry about, because an accountant who follows GAAP and IFRS could not have breached the standard of care.
• D) Sumanthra has nothing to worry about, because accountants are immune from liability.
• E) Sumanthra has nothing to worry about, because negligence requires proof of more than mere financial loss.

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Definitions:

FCC License

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Broadcast

The transmission of audio and video content to a dispersed audience via radio, television, or other digital platforms.

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A method of transmitting content such as TV and radio broadcasts wirelessly using radio waves.

Adversarial Journalism

Adversarial journalism refers to a style of reporting in which the press maintains a skeptical or oppositional stance towards the government and other power structures, aiming to rigorously question and scrutinize their actions.