You must know the difference among: Negligence, Actual Fraud, Constructive Fraud or Gross Negligence. Yaeger explain very well that: read many time until you became familiar with 🙂
Accountants are liable for Negligence-must know 4 elements
lements of Negligence
Duty of Care The accountant owed a duty of due care to the party harmed
Breach The accountant breached by failing to use due care
· Failed to act like a reasonably prudent accountant
· Usually means failed to follow GAAS or GAAP unless following
GAAS or GAAP would make the report misleading
Damages Some type of harm was suffered
Casuality The damages were caused by the accountant’s breach
Accountant is liable for fraud – either actual or constructive.
a. Actual Fraud – must know 5 elements ELEMENTS OF FRAUD
Must have Material Misrepresentation of fact
Must have Scienter – intent to deceive (misrepresentation was made intentionally or
knowingly)
Must have Reasonable Reliance
Must have Intent to rely
Must have Damages – liable to anyone suffering a loss
b. Constructive Fraud or Gross Negligence has all 5 elements of actual fraud but scienter is taken care of by a reckless disregard for the truth 5 ELEMENTS OF CONSTRUCTIVE FRAUD –
Must have Material Misrepresentation of fact
Reckless disregard for the Truth (making a statement without knowing if it is true or
false)
Must have Reasonable Reliance
Must have Intent to Rely
Must have Damages – liable to anyone suffering a loss
FAR - 77 x2 Wiley book & no test bank
AUD - 83 x3 NINJA Test bank 3 time
REG - 80 x1 NINJA Test bank
BEC - 78 X2 NINJA Test bank ..done!!promesa cumplida mama -que llege al cielo 🙂
Ethic 100% Licensed VA CPA
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