Question

QUESTION 3 BugFree, Inc. is a Texas corporation that does business in Oklahoma, Texas and New Mexico. BugFree hired Trina, a Texas CPA, to prepare its tax returns. Trina told BugFree that they did not need to file a tax return in New Mexico, but she really did not check the rules. BugFree received tax and penalty assessment from the New Mexico Taxation and Revenue Department. If BugFree sues Trina for making the error, who is likely to win? a Trina because she did not have a duty to know New Mexico laws Ob. Trina because she is a Texas CPA, not a New Mexico CPA OC BugFree because BugFree relied on Trina's professional opinion and was injured d. Trina because BugFree cannot show reliance on Trina's judgment QUESTION 4 10 Destiny Harris, CPA contacted First Bank and pretended to be her sister-in-law, Felicia Harris, in order to obtain Felicia's bank records. Felicia is married to Destiny's brother and the two are going through a rocky divorce. Would Destiny's impersonation of Felicia affect her CPA license? O& Yes, because the call was not authorized by Felicia b. No, because the fraud does not involve financial statements OC No. because Felicia did not mean to do harm O d No, because Felicia was not a clienti

Answer 1

Q 3:

Answer : (D) Trina because BugFree cannot show reliance on Trina's judgement.

CPA is not responsible for any acts that caused due to the negligence of the client. The client has to verify whether the statement made by the CPA is true and real.

Q 4:

Answer : (D) No, because Felicia was not a client.

This is because there is no official relationship between Felicia and Destiny,CPA. CPA license may be revoked for the following situations,

1. Violating standard accounting practices and found guilty of professional malpractice or an ethics violation.
2. If he fails to file an Income tax return or files an fraudulent return.
3. CPA's employed by federal government agencies can find themselves facing disciplinary actions imposed by SEBI and other government agencies.