Asked by Ranjani Ramaswamy on Apr 29, 2024
Verified
Because of the potential for significant losses to sellers and buyers, under both of the federal securities acts liability is imposed on accountants for all acts of negligence, including "mere" negligence.
Federal Securities Acts
Laws enacted by the U.S. federal government designed to regulate the securities industry and protect investors from fraudulent practices.
Significant Losses
Large or impactful financial, material, or reputational reductions experienced by individuals, organizations, or entities.
- Acquire knowledge on the notion of liability in the context of professional services and identify when a professional can be held accountable for acts of negligence or misconduct.
- Understand the obligations of accountants to identify and disclose fraud or financial discrepancies in a client’s records.
Verified Answer
TP
Tereza PerezApr 29, 2024
Final Answer :
False
Explanation :
Under the Securities Act of 1933, accountants can be held liable for "mere" negligence, but under the Securities Exchange Act of 1934, the standard is higher, requiring scienter (a form of intent or knowledge of wrongdoing) for liability to be imposed.
Learning Objectives
- Acquire knowledge on the notion of liability in the context of professional services and identify when a professional can be held accountable for acts of negligence or misconduct.
- Understand the obligations of accountants to identify and disclose fraud or financial discrepancies in a client’s records.
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