Chapter 1

Question 1

When may a contingent fee be charged?

Answer 1

• Representing a client in connection with an IS examination of an original return
• An amended return or
• Claim for refund or credit
• Services rendered in connection with any judicial proceeding arising under the Code.

Question 2

Realistic possibility

Answer 2

33% - 50%

Question 3

Signing Tax return preparer

Answer 3

bears primary responsibility for the overall accuracy of the claim or return

Question 4

Nonsigning tax preparer

Answer 4

those other than the Signing TRP who prepare all or a substsantial portion of a return

Question 5

No substantial authority

Answer 5

<40% chance of being sustained

Question 6

No reasonable basis

Answer 6

<20% chance of being sustained

Question 7

more likely than not

Answer 7

<50%

Question 8

If a TRP prepared a return involved in a tax shelter that was disclosed on the return, in which case would the TRP penalty not be applicable

Answer 8

it is reasonable to believe that the position would more likely than not be upheld

Question 9

Who can grant a CPA license?

Answer 9

state board of accountancy

Question 10

punitive damages

Answer 10

damages intended to reform or deter the defendant and others from engaging in conduct similar to that

Question 11

compensatory damages

Answer 11

replacing what was lost

Question 12

privity

Answer 12

a close relationship to the same right of property or the power to enforce a promise or warranty. An individual cannot sue on a contract to which one was not a party

Question 13

scienter

Answer 13

intent or knowledge of wrongdoing

Question 14

Who is a CPA liable to?

Answer 14

anyone in a class of third parties who the CPA knows will rely on the opinion

Question 15

Foreign Corrupt Practices Act Liability - 2 key positions

Answer 15

anti-bribery

accoutning provisions

Question 16

RICO Racketeer influenced corrupt organizations act - two sides

Answer 16

criminal

civil

Question 17

What is the key to establishing a pattern of racketeering activity for purposes of Section 1962c?

Answer 17

Relationship

Continuity

Question 18

FCPA’s accounting provisions apply to whom?

Answer 18

SEC registered corps

Question 19

What did SOX do in response to Enron?

Answer 19

Created the PCAOB
Required the rotation of audit partners
Strengthened criminal penalties for securities fraud
Restricted auditors of public companies from providing the full range of nonaudit services to public audit clients

Question 20

A publically traded US company under the FCPA’s accounting provisions must devise internal accoutning controls sufficient to provide a reasonable assurance that:

Answer 20

Access to assets is limited

Transactions are executed in accordance with mgmt’s general or specific authorization.

Question 21

RICO’s two sides

Answer 21

Criminal

Civil

Question 22

RICO prohibits

Answer 22

• Receiving money/property thru a pattern of racketeering activity and then investing that money into an enterprise.
• Acquiring and controlling an enterprise through a pattern of racketeering activity.
• conducting or participating directly or indirectly in the conduct of an enterprises affairs.
• conspiring to violate the above

Question 23

What are the 4 elements of RICO section 1962c?

Answer 23

• defendant conducted or participated in the conduct.
• of an enterprise
• through a pattern
• of racketeering activity.

Question 24

Who has recognized an accountant-client privilege

Answer 24

approx 15 states and Congress for very limited purposes when tax practitioners are involved

Question 25

Who does the privilege belong to in a accountant-client privilege

Answer 25

the client

Question 26

Have state courts recognized an accountant-client testimonial privilege?

Answer 26

No

Question 27

Has the federal courts recognized an accountant-client privilege?

Answer 27

No

Question 28

Where do state privilege statutes apply?

Answer 28

Only in state courts in the particular state, not in federal court