While Conducting an Audit,Larson Associates CAs Failed to Detect a Material

While conducting an audit,Larson Associates CAs 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) client was aware of the misstatements
C) purchaser was not in privity of contract with Larson
D) identity of the purchaser was not known to Larson at the time of the audit

Correct Answer:

Verified

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

Access For Free