Hawthorne Corp. entrusted Edgar, an independent accountant, to prepare an audit report to apply for a loan from Daft Corp. Edgar accepted the accuracy of the client's books without proper investigation while representing that he had completed Hawthorne's audit. A careful audit, however, discovers later that an employee of Hawthorne Inc. was regularly embezzling funds. In this scenario, Edgar:
A. will not be liable to Hawthorne Corp. to return the fee for the audit because the loan was not provided by Daft Corp.
B. will be liable to Daft Corp. as well as any other creditor who provided loans to Hawthorne Corp. based on his audited financial statements.
C. will be liable to Hawthorne Corp. for any losses it suffered from the time when his audit should have discovered the embezzlement.
D. will not be liable to any of the parties as he does not owe them the duty of superior skill or careful scrutiny.
Answer: C
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