Ben, an accountant, certifies several audit reports on Corporate Business, Inc. (CBI), Ben's client, knowing that CBI intends to use the reports to borrow money from Delta Credit Company. Ben believes that the reports are true and does not intend to deceive Delta, but does not check the reports before certifying them. Can Ben be held liable to Delta?
What will be an ideal response?
Yes. In this situation, Ben may be liable on the ground of negligent misrepresentation. This occurs when a person misrepresents a material fact by failing to exercise reasonable care in uncovering or disclosing the facts, or by not using the skill and competence that his or her business or profession requires. In effect, the negligence is given the same weight as scienter, or an intent to deceive, and the case is treated the same as a case involving fraudulent misrepresentation.
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Excursion Corp increased its dollar amount of working capital over the past several years. To further evaluate the company's short-run liquidity, which one of the following measures should be used?
a. The current ratio b. An analysis of the company's long-term debt c. An analysis of the return on stockholders' equity d. An analysis of retained earnings
The investments category on the balance sheet normally includes investments that are intended to be held for a short period of time
Indicate whether the statement is true or false
Answer the following statements true (T) or false (F)
1) An investment today of $8,424 at 6% will yield payments of $2,000 per year for five years, or total payments of $10,000 over five years. The reason for this increase is that the interest is being earned on principal that is left invested each year. 2) When computing the present value, the interest rate will vary depending on the amount of risk. Riskier investments, such as FDIC-insured bank deposits, command higher interest rates. 3) When computing the present value, the interest rate will vary depending on the amount of risk. Safer investments, such as FDIC-insured bank deposits, yield lower interest rates. 4) Discounted cash flow methods incorporate compound interest by assuming that companies will reinvest future cash flows when they are received. 5) Net present value is defined as the difference between the present value of the investment's net cash inflows and the investment's initial cost.
An employer can refuse to hire on the basis of an applicant's prior arrest and conviction record, if:
A. a lower court granted probation to the applicant at some point. B. the employer can show that such a policy is job related. C. a judicial appeal upheld a prior decision. D. the company prides itself on a perfect record by all employees.