The Leading Precedent-Setting Case in Third-Party Liability Was a 1931

question 17

Multiple Choice

The leading precedent-setting case in third-party liability was a 1931 U.S.case,Ultramares v.Touche.What is the key aspect of this case?

• A)To succeed,claimants must be foreseeable users of the audited financial statements that are part of the claim process.
• B)Ordinary negligence is insufficient for liability to third parties because of lack of privity of contract.
• C)The auditor must have actual knowledge of the users of the financial statements to establish privity.
• D)There is no general auditor liability to shareholders,since the loss of equity was suffered by the company.

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