• Question 5 Hugh, CPA, has developed an opinion for which tax avoidance is a significant purpose that is marketed to potential investors. According to Treasury Department Circular 230
• Question 6 Under the liability provisions of Section 11 of the Securities Act of 1933, a CPA who certifies financial statements included in a registration statement generally will not be liable to a purchaser of the security
• Question 7 Which of the following circumstances is a defense to an accountant’ s liability under Section 11 of the Securities Act of 1933 for misstatements and omissions of material facts contained in a registration statement?
• Question 8 A CPA partnership may, without being lawfully subpoenaed or without the client’ s consent, make client workpapers available to
• Question 9 An accounting firm was hired by a company to perform an audit. The company needed the audit report in order to obtain a loan from a bank. The bank lent $ 500,000 to the company based on the auditor’ s report. Fifteen months later, the company declared bankruptcy and was unable to repay the loan. The bank discovered that the accounting firm failed to discover a material overstatement of assets of the company. Which of the following statements is correct regarding a suit by the bank against the accounting firm? The bank
• Question 10 In accordance with the AICPA Statements on Standards for Tax Services, if after having provided tax advice to a client there are legislative changes which affect the advice provided, the CPA
• Question 11 Alex Stone, CPA, prepared Ray Pym’ s 2012 federal income tax return. Pym advised Stone that he had paid doctors’ bills of $ 15,000 during 2012, when in fact Pym had paid only $ 3,000 of bills. Based on Pym’ s representations, Stone properly computed the medical expense deduction, with consequent understatement of tax liability of more than $ 5,000. Pym’ s total tax liability shown on the return was $ 40,000. Stone had no reason to doubt the accuracy of Pym’ s figures, although Stone did not request documentation for the expenses claimed; but he was assured by Pym that sufficient