Winslow Manufacturing sought a loan from National Lending Corporation.In connection with the loan application,National required that Winslow submit certain audited financial statements.Winslow had an audit performed by an independent CPA,who submitted his report to Winslow under the presumption that his report was to be used solely for the purpose of negotiating a loan from National.After National rejected Winslow's loan application,Winslow submitted the CPA's report to other lenders in connection with its loan applications with them.It was subsequently learned that the CPA,despite the exercise of reasonable care,had failed to discover a sophisticated embezzlement scheme by Winslow's chief accountant.Under these circumstances,the CPA is:

Question

Quizplus · Accepted Answer

There are numerous legal theories under which an accountant might be found liable.However,the main basis of liability for accountants is the duty to exercise ordinary skill and care.Breach of this duty may lead to an action grounded in the tort of negligence.In the above case,since the CPA has not breached the duty to exercise ordinary skill and care he is not liable to any of the parties.

Winslow Manufacturing Sought a Loan from National Lending Corporation