Elliot Corp

Elliot Corp.is interested in purchasing Roger Corp.Prior to the purchase Elliot hired Adam & Co.to audit the financial statements of Roger.During the audit,Adam & Co.failed to discover a fraud that resulted in material misstatements in Roger's financial statements.After the acquisition,the fraud was discovered and Elliot Corp.suffered substantial losses.If Elliot sues Adam & Co.,Elliot must prove that Adam & Co:

A) Acted recklessly or with lack of reasonable grounds for belief.
B) Knew of the instances of fraud.
C) Failed to exercise the appropriate level of professional care.
D) Demonstrated gross negligence.

Correct Answer:

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