While Conducting an Audit, Larson Associates CAs Failed to Detect

question 41

Multiple Choice

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.

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Definitions:

Hyperopic

A term describing a condition of the eye where distant objects can be seen clearly, while close objects appear blurred, also known as farsightedness.

Presbyopia

A condition in which the eye gradually loses the ability to focus on close objects, typically associated with aging.

Emmetropic

Emmetropic refers to the normal condition of the eye wherein light focuses directly on the retina, resulting in perfect vision without the need for corrective lenses.

Myopia

A vision condition where close objects appear clear but distant objects are blurry, due to the eye's shape causing light rays to focus in front of the retina.