Lauren hires Humphrey,a CPA,to audit her financial statements.The engagement letter includes a statement acknowledging that audited financial statements are needed for a filing with a regulatory body.Humphrey completes the audit and issues an unqualified opinion.Based on the audited financial statements,Key Largo Bank approves a 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 foreseeable party because it relied on the audited financial statements to approve the loan, even though it was not specifically mentioned in the engagement letter.

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