Question

1.Under the liability provisions of Section 18 of the Securities Exchange Act of 1934, for which of the following actions would an accountant generally be liable?

Negligently approving a reporting corporation's incorrect internal financial forecasts.

Negligently filing a reporting corporation's tax return with the IRS.

Intentionally preparing and filing with the SEC a reporting corporation's incorrect quarterly report.

Intentionally failing to notify a reporting corporation's audit committee of defects in the verification of accounts receivable.

Answer 1

Under the liability provisions of Section 18 of the Securities Exchange Act of 1934, an accountant would generally be held liable for the following:

Intentionally preparing and filing with the SEC a reporting corporation's incorrect quarterly report. According to Section 18 of the Securities Exchange Act of 1934, a defendant is held liable for providing false or misleading information in any of the documents or reports. Since quarterly reports are required under the 1934 Act, a defendant who intentionally prepared and filed with the SEC a reporting corporation's incorrect quarterly report would be held liable under Section 18.

Therefore, the correct option is c.