Kerry CPA Is the Auditor for Sammy Corp

question 33

Multiple Choice

Kerry CPA is the auditor for Sammy Corp.During the audit,Kerry discovers a material misstatement in Sammy's financial statements.Sammy's management tells Kerry that if the misstatement is corrected or if Kerry issues an opinion that indicates there is a material misstatement,Sammy Corp.will likely have to declare bankruptcy and thousands of employees will lose their jobs.Which of the following statements is true if the misstatement is not corrected and Kerry issues an unqualified opinion on Sammy's financial statements?

• A)Kerry is liable only to third parties in privity of contract.
• B)Kerry is liable only to known users of the financial statements.
• C)Kerry is likely liable to any person who suffered a loss as a result of the fraud.
• D)Kerry is likely liable to third parties even if the third parties were aware of the fraud and did not rely on the opinion.

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Definitions:

Temporal Lobe

A region of the cerebral cortex responsible for processing auditory information and encoding memory.

Parietal Lobe

The parietal lobe is a region of the brain associated with processing sensory information related to touch, pressure, temperature, and pain.

Primary Auditory Cortex

The part of the temporal lobe that is responsible for processing auditory information.

Temporal

Pertaining to time or located near the temples of the head.