Smart issued an unmodified auditor's opinion on the 2012 financial report of Max Ltd, which was filed with ASIC.Smart did not detect material misstatements in the financial report as a result of negligence in the performance of the audit. Based upon the financial report, Bird purchased shares in Max Ltd. Shortly afterwards, Max Ltd
Became insolvent, causing the price of the shares to decline drastically. Bird has commenced legal action
Against Smart for damages. Smart's best defence to such an action would be that:

Question

Quizplus · Accepted Answer

There is no proof of proximity, meaning Bird must establish a close relationship or reliance on the audit report, which is typically difficult for third parties like investors.

Smart Issued an Unmodified Auditor's Opinion on the 2012 Financial