Question

Tinder the Ultramares rule, an accountant that negligently prepares a client's financial report will be liable to clients and any person or limited foreseeable class of persons who the CPA knows will be relying on the CPA's work. (7) persons in privity of contract with the CPA and intended third parties. 13 clients and any third party that foreseeably relied on the accountant's report. (4) the client only. Yn di or DISCUSSION QUESTIONS AND PROI G.IZOBJECTIVES 5-3,5-4,5-5,5-6) Following are eight statements with missing terms involv- ing auditor legal liability. is generally only available as a defense in suits brought by clients. 2. Under the Ultramares doctrine, an auditor is generally not liable for to third parties lacking_ 3. A third party lacking privity will often be successful in bringing a claim against the auditor if they can demonstrate_ 4. The broadest class of third parties under common law is known as 5. Under the 1933 Act, plaintiffs do not have to demonstrate but need merely demonstrate the existence of a(n) 6. The auditor will use a defense of in a suit brought under th- 1933 Securities Act. 7. Based on the ruling in Hochfelder v. Ernst & Ernst, an auditor generally must have know edge and to be found guilty of a violation of Rule 10b-5 of the 1934 Ac 8. After passage of the Private Securities Litigation Reform Act, auditors generally ha _liability in federal securities cases. Terms a. Due diligence g. Intent to deceive b. Reliance on the financial statements h. Privity of contract c. Fraud i. Gross negligence d. Ordinary negligence j. Foreseen users e. Separate and proportionate k. Material error or omission f. Contributory negligence For each of the 11 blanks in statements 1 through 8, identify the most appropriatet No term can be used more than once. 5-18 (OBJECTIVES 5-3, 5-7) The following independent scenarios describe auditor beh on an audit engagement. 1. The audit engagement partner, Marc Johnson, recently received a subnoena for

Answer 1

Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you.
Part 1	f. Contributory Neglicence
Part 2	d. Ordinary Negligence
	h. Privity of contract
Part 3	c. Fraud
	i. Gross Negligence
Part 4	j. Forseen users
Part 5	b. Reliance on the financial statements
	k. Material error or ommission
Part 6	a. Due Diligence
Part 7	g. Intent to deceive
Part 8	e. Separate and Proportionate