Edward, an Accountant, Certified a Client's Financial Statements Because He

question 13

Multiple Choice

Edward, an accountant, certified a client's financial statements because he believed they were correct on the basis of his use of standard accounting and auditing practices. Later, while doing further work for the same client, Edward discovered information leading him to the conclusion that the financial statements he had certified were false and misleading. Which of the following statements is true of this scenario?

• A) Edward has a duty of loyalty only to the third parties who must have reasonably relied on the accuracy of those financial statements.
• B) Edward can have no liability to anyone if he chooses not to reveal the unreliability of the financial statements because when he certified them, he had good reason to believe they were accurate.
• C) Edward has a duty to disclose the unreliability of the financial statements to anyone he knows is relying on the financial statements.
• D) Edward has no duty to inform any third parties of what he has discovered.

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Definitions:

Forced Expiration

The act of expelling air from the lungs with effort beyond normal exhalation.

Diaphragm

is the primary muscle used in the process of breathing, separating the thoracic cavity from the abdominal cavity.

External Intercostals

Muscles located between the ribs that help expand the chest cavity during inhalation.

Prime Mover

The muscle or group of muscles primarily responsible for generating a specific movement in the body.