Auditors May Be Held Liable to Both Their Clients and Third

question 22

Essay

Auditors may be held liable to both their clients and third parties under common law.
a.What must a client prove to recover its losses from the auditors under common law?
b.In a court that adheres to the precedent set by the Ultramares v.Touche case,what must an ordinary third party prove to recover losses from the auditors under common law?

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Definitions:

Sensory Memory

The shortest-term element of memory that allows individuals to retain impressions of sensory information after the original stimuli have ended.

Cognitive Architecture

The underlying structure and framework that defines how the human mind organizes and processes information and knowledge.

Controlled

Describes an experimental condition or variable that is carefully managed or regulated to isolate its effects.

Information Processing

A psychological model that describes how humans perceive, analyze, manipulate, and store information, akin to the functions of a computer.