SOLVED

[Unaudited financial statements] ABC Company hires Abe, an accountant, to create financial statements. Abe creates the financial statements without using general accounting procedures and clearly marks the statements as “unaudited”. 71) Could Abe be liable for the contents of the financial statements? A) No, because accountants are not liable for the contents of unaudited financial statements. B) Yes because he was negligent. C) No, if he inserted a broad and general disclaimer on the financial statements D) Yes, because he did not follow GAAP. E) Yes, but only for the areas of the document that did not include GAAP. 72) Are there any circumstances under which Abe could be held liable for the contents of the unaudited financial statements? A) Yes if liability is reasonably foreseeable. B) No, accountants are not liable for the contents of unaudited financial statements. C) No, if Abe included an opinion letter with a qualification. D) Yes, if Abe failed to clearly mark the financial statements as being unaudited. E) No, if Abe included an opinion letter with a broad and general disclaimer. 73) Does the attorney-client privilege apply to accountants? A) Yes, but only if the accountant is also an attorney. B) Yes, all communication between accountant and client is protected by the attorney-client privilege. C) No, because accountants have the accountant-client privilege. D) No, because attorneys do not need accountants in order to represent their client. E) Yes, if the communication between accountant and client is made in confidence for the purpose of obtaining legal advice from the attorney. 74) Under which of the following circumstances would the attorney-client privilege apply to an accountant? A) When the attorney refers the client to seek the accountant’s advice about a legal matter. B) When only accounting service is sought. C) When an accountant meets privately with the client for the purpose of obtaining legal advice from the lawyer. D) When the accountant is also an attorney. E) When the client seeks the accountant’s advice about a legal matter. [Carter’s financials] Kayla works as an accountant. Rudy, an attorney, is working on a case for Carter, who is suing his business partner. Rudy does not have the time or the background to perform a complete analysis of Carter’s financial statements, so Rudy asks Kayla to meet with Carter and assist Rudy with interpreting Carter’s financial statements. Kayla meets with Carter, who provides a lengthy explanation of the financial statements and facts of the case. Afterwards, she prepares a memorandum for Rudy outlining her analysis of the financial issues of the case. Kayla runs into Carter at a baseball game several months later. Carter tells her that the stress is getting to him and he wants to move to Florida because he can no longer tolerate his business partner. A year later, at trial, Kayla is called as a witness by Carter’s business partner to testify against Carter. No accountant-client privilege exists in Kayla’s state, which is also where the trial takes place. 75) If Kayla is called to testify at trial, what is her best argument against revealing information about Carter’s financial statements? A) Although accountant-client privilege does not exist in her state, federal law recognizes it. B) Revealing the requested information would be malpractice. C) The financial statements are confidential working papers. D) The attorney-client privilege. E) She has an ethical duty to keep the information confidential. Â Â