Regulation Exam

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  1. Constructive Fraud
    Failure to even use slight care. Often referred to as gross negligence.
  2. Common Law
    Law that has been established by judicial precedents. much of it is codified in State statutes. Source of liability to clients and 3rd parties (not covered by securities laws).
  3. Contributory Negligence
    Negligence on the part of the plaintiff that contributed to that party's losses. will typically mitigate some or all the defendant's damages.
  4. Due Diligence
    The standard of care required under filings under the SEC Act of 1933. To establish, an accountant must have: 1.)made a resonable investigation; 2.)have reasonable grounds to believe that registration statement and FS were not misleading.
  5. Fraud
    A misrepresentation intended to mislead another party or a representation made with a reckless disregard for the truth.
  6. Joint and Several Liability
    A concept of liablilty similar to joint liability except that if all of the judgement is recovered from one defendant that pary may attempt to collect from other defendants their portionate shares of the judgement. CPA firm = 30%; Management 70%. Bank can recover 100% from CPA firm and CPA firm must then collect share from management.
  7. Joint Ethics Enforcement Program (JEEP)
    a joint program of the AICPA and state CPA societies to jointly investigate ethics violations.
  8. Joint liablility
    a liability concept in which any joint defendent may be forced to pay the entire amount of a judgment.
  9. Negligence
    Failure to perform with the level of skill and judgment possessed by a typical professional. Ordinary negligence.
  10. Primary Beneficiary
    a party other than the client who primarily benefits from the contractual services provided by the CPA. Has the same rights as the client under common law.
  11. Privileged Communication
    Communication that is not subject to disclosure in court or administrative proceedings. Established by law and is generally communication between accountant and client is not privileged.
  12. Privity
    a mutual relationship established between parties typically by a contract.
  13. Public Company Accounting Oversight Board (PCAOB)
    A nonprofit organization created by the Sarbanes-Oxley Act to oversee the audits of public companies (issuers).
  14. Public Company Accounting Reform and Investor Protection (Sarbanes-Oxley) Act
    An act that set a new set of enhanced standards for public company board, management, and public accounting firms. Established PCAOB.
  15. Racheteer Influenced and Corrupt Organization (RICO) Act
    An act designed to allow prosecution of organized criminals. However, the act has been used to pursue CPA firms who engage in multiple instances of wrongful acts. Civil actions under the act can result in recovery of treble damages.
  16. Securities Act of of 1933
    a federal securities act that covers the initial registration of securities.
  17. Securities Act of 1934
    A federal securities act that covers the secondary purchase and sale of securities.
  18. Several Liability
    A concept of liability in which joint defendants are responsible for only their proportionate share of the judgment. In case of CPA 30% and Management 70%; bank may recover only 30% from CPA and 70% from management.
  19. State Board of Accountancy
    State boards that regulate the practice of public accountancy in the state or jurisdiction.
  20. Statements on Standards for Tax Services
    AICPA standards for CPAs that perform tax services for clients.
  21. Treasury Department Circular 230
    Regulatory requirements regarding the autority to practice before the IRS.
  22. US Securities Exchange Commission (SEC)
    A federal agency with primary responsibility for enforceing the federal securities laws and regulating the securities industry.
Card Set:
Regulation Exam
2012-02-29 22:38:57
Business Law

Professional and Legal Responsibilities
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