Which of the following is not a valid defense for auditors' liability to third parties for ordinary negligence under common law?
A) The loss was caused by factors other than the materially misstated financial statements.
B) The third parties lack the proper standing (relationship) to bring suit in that jurisdiction.
C) The third parties lack a privity relationship with auditors.
D) The third parties did not rely upon the financial statements.

Question

Quizplus · Accepted Answer

Under common law, lack of privity is not a valid defense for auditors' liability to third parties for ordinary negligence, as auditors can be liable to third parties who are foreseeable users of the financial statements.

Which of the Following Is Not a Valid Defense for Auditors