If a Stockholder Sues a CPA for Common Law Fraud

question 74

Multiple Choice

If a stockholder sues a CPA for common law fraud based on false statements contained in the financial statements audited by the CPA,which of the following,if present,would be the CPA's best defense?

• A)The stockholder lacked privity to sue.
• B)The false statements were immaterial.
• C)The CPA did not financially benefit from the alleged fraud.
• D)The client contributed to the negligence.

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Definitions:

Psychoanalysis

Sigmund Freud’s method for delving into the unconscious mind to better understand a person’s motives and needs.

Motives

Internal states that direct behavior towards specific goals or objectives.

Variables

Elements, features, or factors that are likely to vary or change within a study, model, or experiment.

Expectancy Theory

A psychological theory proposing that people are motivated to act in a certain way based on their expectation of the outcome and its attractiveness.