Which Statement Is Correct Concerning an Auditor's Statutory Legal Liability

question 17

Multiple Choice

Which statement is correct concerning an auditor's statutory legal liability?

• A)The Securities Act of 1933 broadened the auditor's common law liability and the Securities Exchange Act of 1934 narrowed it.
• B)The auditor has a greater burden of defense under the Securities Act of 1933 than under the Securities Exchange Act of 1934.
• C)Criminal liability only arises under state law.
• D)Statutory liability usually modifies the auditor's liability to the client.

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Definitions:

Carrying Amount

The value at which an asset is recognized on the balance sheet, considering factors such as depreciation or amortization.

Installment Note

A debt or loan that is repaid over time with a set number of scheduled payments.

Fiscal Year

A 12-month period used for accounting purposes and preparing financial statements, which may not align with the calendar year.

Principal Repayment

The process of paying back the original amount borrowed from a lender, excluding interest payments.