Section 1: 10–20%R3
Legal Duties and Liability of Tax Practitioners
Exam insight
The exam tests how far an accountant's liability reaches, to clients, to known third parties, or to anyone foreseeable, and the sharp contrast between the 1933 Act (no reliance or negligence to prove) and the 1934 Act (scienter required). The limited §7525 privilege and working-paper ownership round out a high-yield topic.
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What AICPA wants you to know
- 1Identify an accountant's common-law liability to clients for breach, negligence, and fraud
- 2Contrast the privity, foreseen-user (Restatement), and reasonably-foreseeable third-party standards
- 3Apply Securities Act of 1933 §11 liability and the due-diligence defense
- 4Apply Securities Exchange Act of 1934 §10(b)/Rule 10b-5 and the scienter requirement
- 5Explain the limited §7525 tax-practitioner privilege and its exceptions
- 6State who owns working papers and key Sarbanes-Oxley implications