[BigCom Securities] A&Z and DCB, Two Large Accounting Firms, Prepared

question 80

Multiple Choice

[BigCom Securities] A&Z and DCB, two large accounting firms, prepared registration statements for BigCom, a large, public company, and provided information on BigCom to the SEC. A&Z's statements contained several misrepresentations about BigCom's securities. Wallace, BigCom's Chairman of the Board of Directors, signed the statements prior to the SEC filing. As is the usual procedure, Wallace signed the statements but did not read them carefully. He heard there were some questionable issues about the quality of the statements, but he felt confident with the expertise of the large accounting firms. Subsequently, purchasers of BigCom claimed there were misrepresentations about BigCom's shares in the statements filed with the SEC and sued A&Z, DCB, and Wallace. All three defendants deny liability.
-Would DCB likely be held liable for the misrepresentations in the statements filed with the SEC?

• A) Yes, based on a balancing test.
• B) Yes, unless DCB can prove it performed a due diligence inquiry.
• C) No, because it was not a willful violation.
• D) No, because the misrepresentations were made by A&Z and an accounting firm cannot be held liable for something it did not do.
• E) Yes, unless DCB can prove the misrepresentation did not involve a material fact.

Analyze the effects of demographic factors on poverty rates.

Understand how the government measures poverty and the implications of including non-cash benefits in poverty assessments.

Comprehend the implications of tax policies on income distribution and poverty rates.

Understand the factors contributing to urban poverty and the role of welfare.

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Definitions:

Direct Labor Cost

The total cost of all labor hours worked directly on a specific job or project.

Factory Overhead Applied

This term involves allocating indirect manufacturing costs to products based on a predetermined rate or method.