While Conducting an Audit,Larson Associates CAs Failed to Detect a Material

question 35

Multiple Choice

While conducting an audit,Larson Associates CAs failed to detect a material misstatement 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 for common law negligence,Larson's best defence 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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Definitions:

Excitement Phase

The initial stage of the sexual response cycle, characterized by increased arousal and physiological preparation for sexual activity.

Genital Tissues

These are soft tissues that make up the genital organ's structure in both males and females.

Egodystonic Homosexuality

A disorder (not currently in use) in which the afflicted person is attracted to people of the same sex, but experiences conflict with his or her sexual orientation or wishes to change it.

Sensate Focus

In sex therapy programs, a form of desensitization applied to sexual fears.