When Performing an Audit, a CPA

question 60

Multiple Choice

When performing an audit, a CPA:

• A)must exercise the level of care, skill, and judgment expected of a reasonably prudent CPA under the circumstances.
• B)must strictly adhere to generally accepted accounting principles.
• C)is strictly liable for failing to discover client fraud.
• D)is not liable under any legal standard unless the CPA commits gross negligence or intentionally disregards generally accepted auditing standards.

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Definitions:

Judgment Debt

The amount of money that a court has ordered one party to pay another party as a result of legal action.

Exempt Property

Assets that are protected by law from being seized by creditors or during bankruptcy proceedings.

Collateral

Assets pledged by a borrower to secure a loan or credit, which can be seized by the lender if the borrower fails to make payments.

Creditor

An individual or organization to whom money is owed by a debtor.