13 Under the Securities Act of 1933 subject to some exceptions and limitations

13 under the securities act of 1933 subject to some

This preview shows page 45 - 47 out of 48 pages.

13Under the Securities Act of 1933, subject to some exceptions and limitations, it is unlawful to use the mails or instruments of interstate commerce to sell or offer to sell a security to the public unlessaA surety bond sufficient to cover potential liability to investors is obtained and filed with the Securities and Exchange CommissionbThe offer is made through underwriters qualified to offer the securities on a nationwide basiscA registration statement has been properly filed with the Securities and Exchange Commission, has been found to be acceptable, and is in effect dThe Securities and Exchange Commission approves of the financial merit of the offeringAnswer c14Major, Major, and Sharpe, CPA’s, are the auditors of MacLain industries. In connection with the public offering of $10 million of MacLain securities, Major expressed an unqualified opinion as to the financial statements. Subsequent to the offering, certain misstatements and omissions are revealed. Major has been sued by the purchasers of the stock offered pursuant to the registration statement, which include the financial statements audited by Major. In the ensuing lawsuit by the MacLain investors, Major will be able to avoid liability ifaThe errors and omissions were caused primarily by MacLainbIt can be shown that at least some of the investors did not actually read the audited financial statementscIt can prove due diligence in the audit of the financial statements of MacLaindMacLain had expressly assumed any liability in connection with the public offeringAnswer c15A major impact of the Foreign Corrupt Practices Act of 1977 is that registrants subject to the Securities Exchange Act of 1934 are now required toaKeep records which reflect the transactions and dispositions of assets and maintain a system of internal accounting controlsbProvide access to records by authorized agencies of the federal governmentcRecords all correspondence with foreign nationsdPrepare financial statements in accordance with international accounting standardsAnswer a16The Securities and Exchange Commission’s fraud rule prohibits trading on the basis of inside information of a business corporation’s stock byaOfficersbOfficers and directorscAll officers, directors, and stockholdersdOfficers, directors, and beneficial holders of 10 percent of the corporation’s stockAnswer d17A CPA is subject to a criminal ability if the CPAaRefuses to turn over the working papers to the clientbPerforms an audit in a negligent manner
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cWillfully omits a material fact required to be stated in a registration statementdWillfully breaches the contract with the clientAnswer c18For interim financial reporting, an inventory loss from a temporary market decline in the first quarter which can reasonably be expected to be restored in the fourth quarteraShould be recognized as a loss proportionately in each of the first, second, third, and fourth quartersb
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