Understanding Auditor Legal Liability

Understanding Auditor Legal Liability

12th Grade

16 Qs

quiz-placeholder

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Understanding Auditor Legal Liability

Understanding Auditor Legal Liability

Assessment

Quiz

Other

12th Grade

Hard

Created by

KSyakira KSB

FREE Resource

16 questions

Show all answers

1.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is negligence in auditing?

Negligence in auditing is the failure to exercise due care in the audit process, resulting in inaccurate financial reporting.

Negligence in auditing is the intentional misrepresentation of financial data.

Negligence in auditing refers to the strict adherence to auditing standards.

Negligence in auditing is the careful examination of financial records.

2.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

How is a duty of care defined in the context of auditing?

A duty of care in auditing is the right to make decisions without accountability.

A duty of care in auditing is the ability to ignore client requests.

A duty of care in auditing is the freedom to conduct audits without following any standards.

A duty of care in auditing is the obligation to perform work with reasonable skill, care, and diligence.

3.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Can you name a common law case related to auditor liability?

Donoghue v. Stevenson

R v. Smith

Fletcher v. Rylands

Caparo Industries plc v. Dickman

4.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is meant by a causal relationship in auditing?

A causal relationship shows that two factors are always unrelated.

A causal relationship means that outcomes are purely random and unpredictable.

A causal relationship indicates that one factor is a mere coincidence with another.

A causal relationship in auditing indicates that one factor directly influences another, affecting outcomes in financial statements or processes.

5.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

How can damages be measured in cases of auditor negligence?

Damages are determined by the number of clients the auditor has.

Damages can be measured by assessing the financial loss due to the auditor's negligence.

Damages are calculated based on the auditor's fees.

Damages can be measured by the auditor's reputation.

6.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is the auditor's liability to a third party?

Auditors can be liable to third parties for negligence or misrepresentation if their work is relied upon and causes financial loss.

Auditors are liable to third parties only for intentional fraud.

Auditors can only be liable to clients, not third parties.

Auditors are never liable to third parties under any circumstances.

7.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

In what ways can an auditor be liable to their client?

An auditor is liable for all financial losses incurred by the client.

An auditor can be liable for client decisions made after the audit.

An auditor can be held liable for market fluctuations affecting the client.

An auditor can be liable to their client through negligence, breach of contract, fraud, or failure to comply with professional standards.

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