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WGU D550 ETHICS FOR ACCOUNTANTS OA FINAL EXAM NEWEST
2026 ACTUAL EXAM WITH COMPLETE QUESTIONS AND CORRECT
DETAILED ANSWERS (100% VERIFIED ANSWERS) |ALREADY
GRADED A+| ||PROFESSOR VERIFIED||
The plaintiff must show that the accountant failed to used the
degree of skill and learning normally possessed and used by
public accountants in a similar situation - ANSWER-Breach of
Duty
The plaintiff msut show that he or she suffered damage as a
direct result of the accountants breach of duty - ANSWER-
Damage
A causal nexus exists between the asserted breach of duty and
the damages, such as a business driven into bankruptcy because
it went into debt in reliance on overstated FS - ANSWER-
Causation
A defense to the liebility of the account for malpractice ( it has
been proved that the negligence of the client has proximately
contributed to the accountant's failure to perform ) - ANSWER-
Contributory Negligence
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Replaced the harsh all-or-nothing approach of contributory
negligence with a formula based upon allocation of fault -
ANSWER-Comparative Negligence
Involves conduct that is short of actual intent to cause harm, but
greater than simple negligence (you knowingly take a risk) -
ANSWER-Recklessness
Occurs when an accountant gives false information to a 3rd party
with respect to FS information - ANSWER-Negligent
Misrepresentation
A liability exists when an accountant knows the person who will
rely on the statement and knows the purpose of relying: -
ANSWER-- auditor liability for negligent misrepresentation does
not require proof of the audit that was intended to influence a
particular plaintiff
- a complaint for negligent misrepresentation is sufficient if it
alleges the audt was intended to influence the particular classes
of person to which the plaintiff belongs
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What case established the near privity relationship? - ANSWER-
Credit Alliance v Arthur Anderson and Co.
Credit Alliance v Arther Anderson Co. Established tests for holding
auditors liable for negligence to 3rd parties: - ANSWER--
knowledge that FS to be used for a particular purpose
- intention of 3rd party to rely on FS
- action linking the accountant and the 3rd party
Security Pacific Business Credit Inc. V Peat Marwick and Co.
Sharpened the origional criteria of the near privity test: -
ANSWER-- the auditor must directly convey the audited report to
the 3rd party
- or the auditor acts to influence reliance on the audit report
Common law liability for fraud is available to 3rd parties in any
jurisdiction. The plaintiff must prove: - ANSWER-- a false
representation by the accountant
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- knowledge a belief by the accountant that the respresentation
was false
- the accountant has fraudulent intent or scienter (established by
proof that accountant acted with knowledge of the false
representation
- the 3rd party relied on the false representaiton
- the 3rd party suffered damages
Rusch Factors, Inc V Levin, 1968: - ANSWER-Rhode Island
federal court held an accountant liable for negligence to a 3rd
party not in privity of contract
Restatement (Second) of Torts: - ANSWER-expands an
accountants legal liability for negliegence to any 3rd party
(forseen 3rd party) identified as intended recipients of the work ...
Should be forseeen as a relying on financial information
Blue Bell Inc. V Peat Marwick and Co. 1986: - ANSWER-Texas
court of Appeals held that if an accountant preparing audited
statements knows or should know ... The accountant may be held
liable for negligent misrepresentaion
WGU D550 ETHICS FOR ACCOUNTANTS OA FINAL EXAM NEWEST
2026 ACTUAL EXAM WITH COMPLETE QUESTIONS AND CORRECT
DETAILED ANSWERS (100% VERIFIED ANSWERS) |ALREADY
GRADED A+| ||PROFESSOR VERIFIED||
The plaintiff must show that the accountant failed to used the
degree of skill and learning normally possessed and used by
public accountants in a similar situation - ANSWER-Breach of
Duty
The plaintiff msut show that he or she suffered damage as a
direct result of the accountants breach of duty - ANSWER-
Damage
A causal nexus exists between the asserted breach of duty and
the damages, such as a business driven into bankruptcy because
it went into debt in reliance on overstated FS - ANSWER-
Causation
A defense to the liebility of the account for malpractice ( it has
been proved that the negligence of the client has proximately
contributed to the accountant's failure to perform ) - ANSWER-
Contributory Negligence
,2|Page
Replaced the harsh all-or-nothing approach of contributory
negligence with a formula based upon allocation of fault -
ANSWER-Comparative Negligence
Involves conduct that is short of actual intent to cause harm, but
greater than simple negligence (you knowingly take a risk) -
ANSWER-Recklessness
Occurs when an accountant gives false information to a 3rd party
with respect to FS information - ANSWER-Negligent
Misrepresentation
A liability exists when an accountant knows the person who will
rely on the statement and knows the purpose of relying: -
ANSWER-- auditor liability for negligent misrepresentation does
not require proof of the audit that was intended to influence a
particular plaintiff
- a complaint for negligent misrepresentation is sufficient if it
alleges the audt was intended to influence the particular classes
of person to which the plaintiff belongs
,3|Page
What case established the near privity relationship? - ANSWER-
Credit Alliance v Arthur Anderson and Co.
Credit Alliance v Arther Anderson Co. Established tests for holding
auditors liable for negligence to 3rd parties: - ANSWER--
knowledge that FS to be used for a particular purpose
- intention of 3rd party to rely on FS
- action linking the accountant and the 3rd party
Security Pacific Business Credit Inc. V Peat Marwick and Co.
Sharpened the origional criteria of the near privity test: -
ANSWER-- the auditor must directly convey the audited report to
the 3rd party
- or the auditor acts to influence reliance on the audit report
Common law liability for fraud is available to 3rd parties in any
jurisdiction. The plaintiff must prove: - ANSWER-- a false
representation by the accountant
, 4|Page
- knowledge a belief by the accountant that the respresentation
was false
- the accountant has fraudulent intent or scienter (established by
proof that accountant acted with knowledge of the false
representation
- the 3rd party relied on the false representaiton
- the 3rd party suffered damages
Rusch Factors, Inc V Levin, 1968: - ANSWER-Rhode Island
federal court held an accountant liable for negligence to a 3rd
party not in privity of contract
Restatement (Second) of Torts: - ANSWER-expands an
accountants legal liability for negliegence to any 3rd party
(forseen 3rd party) identified as intended recipients of the work ...
Should be forseeen as a relying on financial information
Blue Bell Inc. V Peat Marwick and Co. 1986: - ANSWER-Texas
court of Appeals held that if an accountant preparing audited
statements knows or should know ... The accountant may be held
liable for negligent misrepresentaion
