While Conducting an Audit, Larson & Larson Chartered Professional Accountants

question 3

Multiple Choice

While conducting an audit, Larson & Larson Chartered Professional Accountants failed to detect a material misstatement in its client's financial statements. Larson's unqualified opinion was included with the financial statements in a 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. Which of the following statements is correct with regard to a suit against Larson and the client by a purchaser of the securities?

• A) The purchaser must prove that Larson was negligent in conducting the audit.
• B) The purchaser must prove that Larson knew of the material misstatements.
• C) Larson will not be liable if they had reasonable grounds to believe the financial statements were accurate.
• D) Larson will be liable unless the purchaser did not rely on the financial statements.

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Definitions:

Early Intervention Programs

Programs designed to address and support the developmental needs of children at risk of future problems as early as possible.

Reducing Violence

Implementing strategies and measures aimed at decreasing the occurrence and severity of aggressive behavior and harm.

Practical Suggestions

Advice or recommendations that are focused on realistic and concrete actions rather than abstract theories.

Adolescents

Individuals in the transitional stage of human development between childhood and adulthood, generally ranging from ages 10 to 19.