As a Consequence of His Failure to Adhere to Generally

question 53

Multiple Choice

As a consequence of his failure to adhere to generally accepted auditing standards in the course of his examination of the Lamp Corp., Harrison, CPA, did not detect the embezzlement of a material amount of funds by the company's controller. As a matter of common law, to what extent would Harrison be liable to the Lamp Corp. for losses attributable to the theft?

• A) He would have no liability, since the ordinary examination cannot be relied upon to detect thefts of assets by employees.
• B) He would have no liability because privity of contract is lacking.
• C) He would be liable for losses attributable to his negligence.
• D) He would be liable only if it could be proven that he was grossly negligent.

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Definitions:

Brain

The organ located in the head of an animal that controls its actions, thoughts, feelings, and interactions with the environment; central to the nervous system.

Mood Molecule

A colloquial term often used to refer to serotonin, a neurotransmitter that is linked to regulating mood, emotions, and several other functions in the body.

Neurotransmitter

Substances that act as intermediaries, sending signals from one nerve cell to another neuron, muscle cell, or gland cell across a chemical synapse.

Dopamine

A neurotransmitter involved in reward, motivation, and pleasure systems in the brain, influencing both movement and emotional responses.