Which of the following is true regarding states that have adopted the Reasonably Foreseeable Users Test for accountant liability to third-parties

Which of the following is true regarding states that have adopted the Reasonably Foreseeable Users Test for accountant liability to third-parties? 
A. All states have adopted it.
B. Three-quarters of the states have adopted it.
C. Half the states have adopted it.
D. Very few states have adopted it.
E. None of the states have adopted it.

Very few states have adopted the general negligence standard of accountant third-party liability called the reasonably foreseeable users test.

Under which of the following tests is an accountant held liable to any third-party that was or should have been foreseen as a possible user of the accountant's work product and that, in fact, did use and rely upon that work product for a proper business purpose? 
A. The Reasonably Foreseeable Users Test
B. The Restatement Test
C. The Privity Test
D. The Near Privity Test
E. None of the above

The reasonably foreseeable users test holds an accountant liable to any third party who was or should have been foreseen as a possible user of the accountant's work product and who did in fact use and rely on that work product for a proper business purpose.

Under which of the following do courts use reasoning similar to that used for the Reasonably Foreseeable Users Test regarding accountant liability to third-parties? 
A. Strict product liability
B. Negligence
C. Fraud
D. Breach of contract
E. None of the above

The general negligence standard of accountant third-party liability is called the reasonably foreseeable users test.

As set forth in the case of Bily v. Arthur Young & Co., in the text, which of the following is true regarding auditor liability to third parties under the Restatement Rule? 
A. An auditor retained to conduct an annual audit and to furnish an opinion for no particular purpose generally undertakes no duty to third parties.
B. An auditor retained to conduct an annual audit and to furnish an opinion for no particular purpose does undertake a duty to any foreseeable third party users.
C. An auditor retained to conduct an annual audit and to furnish an opinion for no particular purpose undertakes a duty only to third parties who are financial institutions.
D. An auditor retained to conduct an annual audit and to furnish an opinion for no particular purpose generally undertakes a duty only to directors of the company who provide loans to the company.
E. An auditor retained to conduct an annual audit and to furnish an opinion for no particular purpose generally undertakes no duty to third parties except for financial institutions and also directors who provide loans to a company.

According to the court, in Bily v. Arthur Young & Co., under the Restatement rule, an auditor retained to conduct an annual audit and to furnish an opinion for no particular purpose generally undertakes no duty to third parties.

Which of the following are various documents used and developed during an audit and included notes, calculations, and memorandums? 
A. Calculation documents.
B. Working papers.
C. Auditing copies.
D. Accounting memoranda.
E. Client documentation.

Working papers are the various documents used and developed during an audit, including notes, calculations, copies, memorandums, and other papers constituting the accountant's work product.

Which of the following is true regarding the use of working papers in negligence cases involving the accountant's work? 
A. Working papers can be used as evidence in negligence cases.
B. Working papers cannot be used as evidence in negligence cases.
C. Working papers can be used as evidence in negligence cases only if a bank is the plaintiff.
D. Working papers can be used as evidence in negligence cases only if a non-corporate plaintiff is involved.
E. Working papers may be used as evidence in negligence cases only if the accountant failed to provide the client with copies of them.

Accountants are advised to maintain all working papers because they can be used as evidence in negligence cases (to show competency of work product).

Which of the following does the Sarbanes-Oxley Act of 2002 require regarding working papers? 
A. Accountants must maintain working papers for ten years starting with the end of the fiscal period in which the audit was conducted.
B. Accountants must maintain working papers for seven years starting on the last day of the audit.
C. Accountants must maintain working papers for five years starting with the end of the fiscal period in which the audit was conducted.
D. Accountants must maintain working papers for one year starting on the last day of the audit.
E. The act does not require that accountants maintain working papers.

The Sarbanes-Oxley Act of 2002 requires keeping working papers for five years starting with the end of the fiscal period in which the audit was conducted.