A CPA Has Been Hired to Audit a Bank That

question 9

Multiple Choice

A CPA has been hired to audit a bank that is regulated by the federal banking authorities.This audit will be submitted by the bank to numerous readers,including federal regulators.The CPA's audit agreement with the bank provides that the bank will "reimburse and indemnify it for all losses it incurs if the bank's financial statements were prepared by the bank in a manner that was misleading or fraudulent." This provision:

• A) Definitely is a violation of the Acts Discreditable Rule
• B) Definitely is not a violation of the Acts Discreditable Rule because it provides for a limitation on the CPA's liability only in cases where the client solely is at fault
• C) Definitely is not a violation of the Acts Discreditable Rule because the CPA firm's agreement is reasonable and appropriate
• D) Potentially is a violation of the Acts Discreditable Rule

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Definitions:

Common Sense

Practical judgment concerning everyday matters, or a basic ability to perceive, understand, and judge in a manner that is shared by nearly all people.

Sociohistorical Context

The social and historical background or environment that influences and shapes individuals, communities, or events.

Childhood Sexual Abuse

The involvement of a child in sexual activity that they do not fully comprehend, are unable to give informed consent to, or that violate the laws or social taboos of society.

Research Attention

The focus and prioritization of certain topics or questions in academic and scientific investigation.