As a Consequence of His Failure to Adhere to Generally

As a consequence of his failure to adhere to generally accepted auditing standards in the course of his examination of the Lamp Corp., Harrison, CPA, did not detect the embezzlement of a material amount of funds by the company's controller. As a matter of common law, to what extent would Harrison be liable to the Lamp Corp. for losses attributable to the theft?

A) He would have no liability, since the ordinary examination cannot be relied upon to detect thefts of assets by employees.
B) He would have no liability because privity of contract is lacking.
C) He would be liable for losses attributable to his negligence.
D) He would be liable only if it could be proven that he was grossly negligent.

Correct Answer:

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Access For Free