Asked by Xhorxhina Gjoni on Jul 06, 2024
Verified
Javier claims that he should not be liable for negligence because Sami committed fraud. Is he correct?
A) Yes, because he was not aware of Sami's conduct.
B) Yes, because Sami's conduct was not reasonably foreseeable.
C) Yes.
D) No, because he failed to detect fraud that a normal audit would have uncovered.
E) No, but only if he violated a statute.
Negligence
The failure to exercise the level of care that a reasonably prudent person would in similar circumstances, leading to harm or damage.
Fraud
A deliberate deception practiced to secure unfair or unlawful gains.
Detect Fraud
The process of identifying false or misleading information, typically to gain a financial advantage.
- Discern the liabilities accountants could be subject to due to negligence and fraudulent acts.
Verified Answer
SM
Samuel MaciasJul 09, 2024
Final Answer :
D
Explanation :
Javier's failure to inquire about the large, vague expenses listed as "inventory" or "miscellaneous office supplies" represents a failure to perform due diligence that a normal audit process would require, especially given the nature of Sami's business. This oversight could have potentially uncovered the fraudulent activities, making him liable for negligence in his professional duties.
Learning Objectives
- Discern the liabilities accountants could be subject to due to negligence and fraudulent acts.