While conducting an audit, Larson Associates CPAs failed to detect a material misstatement in its client's financial statements. Larson's unqualified opinion was included with the financial statements in a registration statement and prospectus for a public offering of securities made by the client. Larson knew that its opinion and the financial statements would be used for this purpose. In a suit by a purchaser against Larson for common law negligence, Larson's best defence would be that the ________.
A) audit was conducted in accordance with generally accepted auditing standards
B) purchaser was not in privity of contract with Larson
C) identity of the purchaser was not known to Larson at the time of the audit
D) client was aware of the misstatements
A) audit was conducted in accordance with generally accepted auditing standards
You might also like to view...
Which one of the following correctly represents one of the basic financial statement models?
a. Assets - Liabilities = Net Income b. Assets + Liabilities = Owners' Equity c. Revenues + Expenses = Net Income d. Beginning Retained Earnings + Net Income - Dividends = Ending Retained Earnings
________ exhibit replacement cycles dictated by physical wear or obsolescence associated with changing style, features, and performance
A) Frequently purchased products B) High-moving goods C) Inexpensive products D) Commodity products E) Infrequently purchased products
An investment today of $8,424 at 6% will yield $2,000 per year for the next five years because interest is being earned on principal that is left invested each year. The following tables are available:
If analysts do not log all incidents, management will still be able to measure performance. They will just measure it without facts.
Answer the following statement true (T) or false (F)