Under common law, an individual or company that (1) does not have a contract with an auditor, (2) is known by the auditor in advance of the audit, and (3) will use the auditor's report to make decisions about the client company has:

Question

Quizplus · Accepted Answer

According to common law, third-party beneficiaries have the same rights as the client in accordance with the terms of the engagement letter. The three conditions mentioned in the question indicate that the third party would reasonably rely on the auditor's report, and therefore, have a right to seek legal action if the report is found to be misleading or incorrect. Therefore, the correct choice is D.

Under Common Law, an Individual or Company That (1) Does