A CPA issued a standard unqualified audit report on the financial statements of a client that the CPA knew was in the process of obtaining a loan.In a suit by the bank issuing the loan,the CPA's best defense would be that the:

Question

Quizplus · Accepted Answer

The CPA's best defense would be that the audit complied with generally accepted auditing standards. The fact that the client was obtaining a loan does not alter the CPA's responsibility to conduct the audit in accordance with professional standards. The client's knowledge of the misstatements does not relieve the CPA of his/her responsibility to detect and report them. The fact that the bank was not the CPA's client may be relevant, but it is not a complete defense. The CPA has a duty to third parties who may rely on the financial statements, including the bank. The fact that the bank's identity was known to the CPA prior to completion of the audit is not particularly relevant.

A CPA Issued a Standard Unqualified Audit Report on the Financial