5. Bailey CPA, audited Lincoln Corporation. The shareholders sued both Lincoln and Bailey for securities fraud under the Federal Securities Exchange Act of 1934. The court determined that there was securities fraud and that Lincoln was 80% at fault and Bailey was 20% at fault due to her negligence in the audit. Both Lincoln and Bailey are solvent and the damages were determined to be $2 million. What is the maximum liability of Bailey? (A) $0 (B) $400,000 (C) $1,000,000 (D) $2,000,000

11. When a company has changed auditors, according to the Professional Standards: (A) The successor auditor has the responsibility to initiate contact with the predecessor auditor to ask about the client before the engagement is accepted; the predecessor has no responsibility to initiate this contact, even when aware of matters bearing on the integrity of management. (B) The predecessor must always respond fully to all inquiries made by the successor auditor. (C) The successor must discuss with the predecessor matters bearing on the engagement prior to accepting the engagement. (D) The successor may choose not to attempt any communication with the predecessor auditor.

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