As Set Forth in the Case in the Text, Bily

question 47

Multiple Choice

As set forth in the case in the text, Bily v. Arthur Young & Co., which of the following is true regarding auditor liability to third parties under the Restatement rule?

• A) An auditor retained to conduct an annual audit and to furnish an opinion for no particular purpose generally undertakes no duty to third parties.
• B) An auditor retained to conduct an annual audit and to furnish an opinion for no particular purpose does undertake a duty to any foreseeable third-party users.
• C) An auditor retained to conduct an annual audit and to furnish an opinion for no particular purpose undertakes a duty only to third parties who are financial institutions.
• D) An auditor retained to conduct an annual audit and to furnish an opinion for no particular purpose generally undertakes a duty only to directors of the company who provide loans to the company.
• E) An auditor retained to conduct an annual audit and to furnish an opinion for no particular purpose generally undertakes no duty to third parties except for financial institutions and also directors who provide loans to a company.

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Definitions:

Defense Mechanisms

Psychological strategies employed by individuals to cope with reality and maintain self-image by unconsciously denying or distorting reality.

Repression

A defense mechanism in psychoanalytic theory where distressing thoughts and feelings are unconsciously blocked from conscious awareness.

Self-Esteem

A person's personal assessment of their value, including both their thoughts and feelings about themselves.

Standardized Personality Tests

Psychological instruments used for measuring and evaluating an individual's personality traits and characteristics in a consistent manner.