1. Under common law, a lawsuit filed by a number of shareholders against the CPAs for an audit the firm performed is most likely to be filed accusing the CPA firm of: Multiple Choice

a) lack of good faith.

b) breach of contract.

c) ordinary negligence.

d) gross negligence.

2.An audit did not detect a material misstatement, and although the auditors are considered 20 percent at fault (management, with no funds available is considered 80 percent at fault), the auditors were found liable for 100% of the damages. This is an illustration of: Multiple Choice a)joint and several liability. b)comparative liability. c)reasonable assurance liability. d)proportionate liability.

3.Under the Ultramares approach to auditor liability auditors are liable to ordinary negligence (given other elements of proof are satisfied) to: Multiple Choice a) all third parties. b) limited class of known or intended users. c)no third parties. d) any third party the auditors could reasonably foresee as user.