Odette, an accountant, contracts to perform services for Percy. Odette acts in good faith and conforms to generally accepted accounting principles, but makes an incorrect judgment. Odette is most likely
A) liable if Odette failed to discover a defalcation.
B) liable if Odette failed to discover a fraud.
C) liable if Odette failed to discover an impropriety.
D) not liable.

Question

Odette, an accountant, contracts to perform services for Percy. Odette acts in good faith and conforms to generally accepted accounting principles, but makes an incorrect judgment. Odette is most likely​
A) ​liable if Odette failed to discover a defalcation.
B) ​liable if Odette failed to discover a fraud.
C) ​liable if Odette failed to discover an impropriety.
D) ​not liable.

Quizplus · Accepted Answer

Odette acted in good faith and conformed to generally accepted accounting principles, therefore she is not liable for an incorrect judgment unless she committed fraud or acted with gross negligence. Odette is not responsible for discovering fraud or defalcation as it is the client's responsibility to disclose such information.

Odette, an Accountant, Contracts to Perform Services for Percy