Auditors in the United Kingdom Sometimes Include Disclaimers of Liability

question 18

Multiple Choice

Auditors in the United Kingdom sometimes include disclaimers of liability in their audit reports. According to the U.S.Securities and Exchange Commission,how effective is this approach to limiting civil liabilities?

• A)It has no effect when included in the financial statements of U.S.companies.
• B)It effectively caps the damage awards that will be made in U.S.civil courts.
• C)It limits who can bring civil action in cases involving the audit of U.S.companies.
• D)It limits both civil and criminal liability against auditors of U.S.companies.

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Definitions:

Open-end Credit

A pre-approved loan between a financial institution and borrower that can be used repeatedly up to a certain limit and can be repaid prior to payments coming due.

Unpaid Balances

Amounts owed that have not been paid by the due date.

Unsolicited Merchandise

Goods sent to a person without their request, often with the implication that payment is expected if the goods are used or not returned.

Gift

A voluntary transfer of property or funds from one person to another without consideration or expectation of return.