While Conducting an Audit,Larson Associates,CPAs,failed to Detect Material Misstatements Included

question 4

Multiple Choice

While conducting an audit,Larson Associates,CPAs,failed to detect material misstatements included 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,Larson's best defense 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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