Shared Flashcard Set

Details

REG
Federal Statutory Liability
30
Accounting
Undergraduate 4
02/09/2012

Additional Accounting Flashcards

 


 

Cards

Term
Foreign Corrupt Practices Act (FCPA)
Definition
post-Watergate response to illegal foreign bribes paid by U.S. companies
Term

2 major provisions of the Foreign Corrupt Practices Act (FCPA)

Definition
  1. anti-bribary aimed at preventing U.S. companies from gaining or retaining foreign business by bribing foreign government officials
  2. accounting provisions aimed specifically at preventing companies from hiding huge bribes on their financial statements
Term
accounting provision of FCPA
Definition
  • companies registered with SEC must keep "reasonably detailed" records which "accurately and fairly" reflect the company's financial activities (doesn't necessairily have to be abroad)
  • must devise internal accounting controls (IACs) sufficient to provide "reasonable assurance" that:
  1. transactions are executed in accordance with management's general or specific authorization
  2. recorded as necessaru to -permit preparation of proper financial statements, and maintain accountability for assets
  3. access to assets is authorized; and
  4. recorded assets are compared with existing assets at reasonable intervals
Term
penalties for violation of FCPA
Definition

criminal: individual=max of $100,000 fine and/or 5 years in jail

corp: maximum of $1,000,000 fine

no criminal penalties for inadvertant or insignifcant errors

 

Civil: max fine of $10,000

Term
Recketeer Influenced Corrupt Organizations Act (RICO)
Definition
prevent organized crime's infiltration into legitimate business
Term
2 sides of RICO
Definition
  1. criminal: charges can be brought by the Department of Justice
  2. Civil: individuals that are injured can sue for teble damages and attorney's fees.
Term
4 acts RICO prohibits
Definition
  1. receiving money or property through a pattern of racketeering activity and subsequently investing that money into an enterprize
  2. acquiring and controlling an enterprise through a pattern of racketeering activity
  3. conducting or participating directly or indirectly in the conduct of an enterprise's affairs
  4. conspiring to violate 1,2, or 3
Term
four elements of Sec 1962 or RICO
Definition
  1. defendent conducted or participated in the conduct
  2. of an enterprise
  3. through a pattern of
  4. racketeering activity
Term
conduct of participation
Definition
accountant who doesn't get involved in "calling the shots" and sticks to the accounting isn't liabale
Term
of an enterprise
Definition
person charged must be separate and distinct from enterprise
Term
through a pattern
Definition
two acts of racketeering occuring within a 10 year period that are related and threaten a continuity of racketeering activity
Term
of racketeering activity
Definition
  • includes mail fraud, wire fraud, and about 30 other acts
  • plaintiff must prove that these acts occurred byt not that the defendant has already been convicted of them (*exception: securities fraud case: plaintiff must prove the defendant has already been found guilty for securities fraud before)
Term
mail and wire fraud
Definition
  • any fraud committed with the use of the mail or telephones is a federal crime
  • use of mail/wires must be an ESSENTIAL part of the fraudulent scheme for liability to attach
  • accountants can be held criminally liable
Term
3 criminal provisions related to document handling in SOX
Definition
  1. willful failure to retain audit and review workpapers
  2. destruction of records
  3. corrupt tampering with documents to be used in an official proceeding
Term
willful failure to retain audit and review workpapers
Definition
knowing and willful failure to retain audit or review work papers for a period of 5 years by up to 10 years in jail and a fine
Term
destruction of records
Definition
  • federal crime to knowingly destroy or change records involved in any federal government matter or bankruptcy
  • punishable by fine, imprisonment up to 20 years or both 

 

Term
corrupt tampering with documents to be used in an official proceeding
Definition
federal frime to tamper with documents used in an official proceeding.  any person who "corruptly" (1) alters, destroys, mutilates, or conceals a record or attempts to do so or (2) otherwise obstructs, influences, or impedes any official proceeding shall be fined or imprisoned up to 20 years or both
Term
securities fraud statutes of SOX
Definition
  • section 1348 punishes anyone who knowingly executes or attempts to execute a scheme or artiface (1) to defraid any person in connection with any security of a public company (2) to obtain, by means of false or fraudulent pretenses, representations or promises, any money or property in connection with a class of stock of a public company.  
  • max imprisonment is 25 years
  • criminal provision punishing conspiracy to commit securities fraud
Term
whistleblower protection of SOX
Definition
  • SOX has 2 civil provisions to encourage whistleblowing (one granting rewards and one giving civil cause to whistleblower to sue in some circumstances)
  • protected from retaliaters
Term
2 types of privildged communications
Definition
  1. testimonial privileges
  2. work product privileges
Term
testimonial privileges
Definition
  • classic privileged communications include attorney-client, doc-patient, and preist-penitent
  • protected pparty can prevent other from testifying
Term
work product privilege
Definition
prevents one party ina lawsuit from learning the other side's attorney's strategies for litigation
Term
accountant-client testimonial privilege
Definition
  1. fed courts have refused to recognize as a testimonial privilege
  2. state courts have refused to recognize a common law accountant-client testimonial privilege
  3. about 15 states have statutorily recoginzed an accountant-client privilege
Term
things to remember about states that do recognize accountant-client testimonial privilege
Definition
  1. client has privilege
  2. client can waive all of privilege or not any of privilege
  3. only applies in state court 
Term
work product privilege
Definition
no free-standing work product privilege for accountants and their clients
Term
tax practitioner privilege
Definition
section 7525 of the IRC extends a modest testimonial privilege to clients of all tax advisors authorized to practice before the IRS
Term
exceptions to tax practitioner privilege
Definition
  1. criminal matters
  2. matters not before the IRS or federal courts in cases brought by or against the U.S.
  3. tax advice on state and local matters
  4. written advice in connection with promotion of a tax shelter
Term
confidential communications
Definition
absent client consent, CPA shall not disclose any confidential information disclosed by clients
Term
5 exceptions to confidential communications
Definition
  1. GAAP calls for disclosure
  2. an enforceable subpoena or summons has been issued
  3. ethical exam is being conducted
  4. peer review requires disclosure
  5. disclosure is to other firm members on a "need to know" basis
Term
Bank Secrecy Act (BSA)
Definition
  •  under the BSA, TP have an obligation to report foreign bank accounts (FBAR)
  • penalties primarily aimed at TP but TRP who checked "no" box might be punished too
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