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.

---

Definitions:

Statute Of Frauds

A legal principle that requires certain types of contracts to be in writing to be legally enforceable.

Signature

The act of signing one's name or a unique mark made by an individual on a document as a proof of identity and intent.

Document

constitutes any written, typed, or digital material that provides information or evidence or serves as an official record.

Selling Price

The amount of money for which a product or service is sold to the buyer.