Smart Issued an Unmodified Auditor's Opinion on the 2012 Financial

question 9

Multiple Choice

Smart issued an unmodified auditor's opinion on the 2012 financial report of Max Ltd, which was filed with ASIC.Smart did not detect material misstatements in the financial report as a result of negligence in the performance of the audit. Based upon the financial report, Bird purchased shares in Max Ltd. Shortly afterwards, Max Ltd
Became insolvent, causing the price of the shares to decline drastically. Bird has commenced legal action
Against Smart for damages. Smart's best defence to such an action would be that:

• A) Bird lacks a contractual relationship as a basis to sue.
• B) the engagement letter specifically disclaimed all liability to third parties.
• C) there is no proof of proximity.
• D) there has been no subsequent sale for which a loss can be calculated.

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Definitions:

African Americans

People in the United States who have ancestry from the black racial groups of Africa.

West Indies

Another term for the Caribbean Islands, highlighting the region discovered by European explorers during their search for a westward route to India.

Maryland

One of the original 13 colonies in the United States, founded in 1632 as a haven for English Roman Catholics.

Economic Development

The process by which a nation improves the economic, political, and social well-being of its people.