Mod 23 Key Terms Flashcards Preview

Yaeger REG > Mod 23 Key Terms > Flashcards

Flashcards in Mod 23 Key Terms Deck (36):
0

Common law

Law that has historically been established by judicial precedents

1

Much common law has now been codified to...

State statutes

2

Common law is the source of liability to...

Clients and third parties (not covered by securities laws)

3

Constructive fraud

Failure to use even slight care

4

Constructive fraud is referred to as...

Gross negligence

5

Contributory negligence

Negligence on the part of the plaintiff that contributed to the party's losses

6

Contributory negligence will typically...

Some or all of the defendant's damages

7

Due diligence is the standard of care under...

Filings under Securities Act of 1933

8

To establish due diligence a CPA must...

1 Have made reasonable investigation

2 Have reasonable grounds to believe

3 Did believe that the financial statement was not misleading

9

Fraud 2 definitions

Misrepresentation intended to mislead another party or

a representation made with reckless regard for its truth

10

Joint and several liability, is a concept of liability that is similar to joint liability except that if...

All the judgment is recovered from one defendant, that party may attempt to collect from other defendants proportionate shares

11

Join Ethics Enforcement Program (JEEP)

Joint program of the AICPA and state CPA societies to jointly investigate ethics violations

12

Joint liability, is a liability concept in which...

Any joint defendant may be forced to pay the entire amount
Of judgement

13

Ex. Of joint liability

Bank files suit against both CPA firm and management for
misleading FS

The bank may recover entire amount from management or CPA firm

14

Negligence

Failure to perform with level of skill and judgment possessed by
A typical professional

15

Negligence is often referred to as...

Ordinary negligence

16

Primary beneficiary

Party other than the client who primarily benefits from contracted services provided by the CPA

17

Primary beneficiary example

If CPA is aware that an audit is being performed at request of client's bank, the bank is a primary beneficiary of contract btw/CPA and client

18

Under common law primary beneficiary has...

Same rights as client

19

Privileged communication

Communication that is not subject to disclosure in court or administrative proceedings

20

Privilege must be established by...

2) and generally communication between accountant and client is...

Law

2) not privileged

21

Privity, 2 part definition

1 Mutual relationship established between parties

2 Typically established by contract

22

The client and third party beneficiaries are in privity with CPA in...

Contract to provide services

23

Public Company Accounting Oversight Board (PCAOB)

Nonprofit organization created by SOX to oversee audits of public companies

24

Public Company Accounting Reform and Investor Protection (SOX) Act

Act that set new set of enhanced standards for public company
boards, management and public accounting firms

25

Racketeer Influenced and Corrupt Organization (RICO) Act

Act designed to allow prosecution of organized criminals

26

The RICO Act was also used to pursue...

CPA firms who engaged in multiple instances (patterns) of wrongful
Acts

27

Civil actions under the RICO Act can result in...

Recovery of Treble damages

28

Securities Act of 1933

Federal securities act that covers initial registration of securities

29

Securities Exchange Act of 1934

Federal securities act that covers the secondary purchase and
Sale of securities

30

Several liability, is a concept of liability in which...

Joint defendants are responsible only for their proportionate share
Of the judgement

31

State boards of accountancy

State boards that regulate the practice of public accountancy
In state or jurisdiction

32

All individual CPAs and CPA firms must be licensed to...

Practice in states where they practice

33

Statements on Standards for Tax Services

AICPA standards for CPAs that perform tax services for clients

34

Treasury Department Circular 230

Regulatory requirements regarding the authority to practice
Before the Internal Revenue Service

35

US Securities and Exchange Commission (SEC)

Federal agency with primary responsibility for enforcing the federal securities laws and regulating the securities industry

Decks in Yaeger REG Class (77):