When creditors who relied on an entity's audited financial statements suffer monetary losses after a customer (the auditors' client)goes bankrupt,what must the plaintiff creditors in a lawsuit for damages show in a court that follows the doctrine in Credit Alliance?
A) The auditors knew and specifically acknowledged identification of the creditors.
B) The auditors could reasonably foresee them as beneficiaries of the audit because entities such as this client use financial statements to obtain credit from vendors.
C) The plaintiffs were foreseen users of the audited financial statements because they were vendors of long standing.
D) All of the above.

Question

Quizplus · Accepted Answer

The Credit Alliance doctrine requires that auditors must have specifically acknowledged the identification of the creditors to be held liable for their losses.

When Creditors Who Relied on an Entity's Audited Financial Statements