What Is a Due Diligence Defense

question 3

Multiple Choice

What is a due diligence defense?

• A)An audit firm must show that it made a reasonable investigation, that the firm followed auditing standards, and accordingly had reasonable grounds to believe, and did believe, that the statements certified were true at the date of the statements and as of the time the registration statement became effective.
• B)Not having to prove reliance on the false or misleading statement or that the loss suffered was the proximate result of the statement if purchase was made before the issuance of an income statement covering a period of at least 12 months following the effective date of the registration statement.
• C)Basing a claim on an alleged materially false or misleading financial statement contained in the registration statement.
• D)Concluding that subsequent events review was in conformity with generally accepted auditing standards.

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Definitions:

Emotional State

The internal condition of feeling or mood of an individual, which can influence perceptions, behaviors, and attitudes.

Affective Action

Behavior driven by emotions and feelings rather than rational calculations or societal norms.

Means-ends Rationality

A decision-making process where actions are planned to achieve specific goals, emphasizing efficiency and the logical selection of means.

Value Rationality

A type of action motivated by beliefs in the inherent value of certain ethical, aesthetic, or religious convictions, irrespective of potential outcomes.