Lauren hires Humphrey,a CPA,to audit her financial statements.The engagement letter includes a statement acknowledging that audited financial statements will be provided to Key Largo Bank for a loan.Humphrey completes the audit and issues an unqualified opinion.Based on the audited financial statements,Key Largo Bank approves the loan to Lauren.Four months later,Lauren files for bankruptcy.Key Largo Bank would most likely sue Humphrey claiming:

Question

Quizplus · Accepted Answer

Key Largo Bank would most likely claim it was a primary beneficiary because the engagement letter specifically mentioned that the audited financial statements would be provided to the bank for a loan, indicating that the bank was a known and intended recipient of the audit report.

Lauren Hires Humphrey,a CPA,to Audit Her Financial Statements