The Ultramares Doctrine Is That Ordinary Negligence Is Insufficient for Liability

question 67

Multiple Choice

The Ultramares doctrine is that ordinary negligence is insufficient for liability of auditors to third parties because of the lack of privity of contract between the third party and the auditor.What type of behavior on the part of an auditor would result in liability to more general third parties according to this doctrine?

• A)conducting an audit engagement when a review engagement had been contracted.
• B)completing work in accordance with a contract that was signed with the client.
• C)deliberate misstatement of the financial statements by management remaining undetected.
• D)fraud or constructive fraud with respect to the working papers.

---

Definitions:

Production Floor

The area of a manufacturing facility where goods are actually produced or assembled.

Purchase Order

A formal document sent by a buyer to a seller requesting the purchase of products or services, specifying types, quantities, and agreed prices.

Legal Obligation

A duty enforced by law that requires an individual or entity to act or refrain from acting in a certain manner.

Specified Date

A particular day designated for a certain event or action to take place.