While conducting an audit,Larson Associates,CPAs,failed to detect material misstatements included in its client's financial statements.Larson's unqualified opinion was included with the financial statements in a registration statement and prospectus for a public offering of securities made by the client.Larson knew that its opinion and the financial statements would be used for this purpose.In a suit by a purchaser against Larson,Larson's best defense would be that the
A)Audit was conducted in accordance with generally accepted auditing standards.
B)Client was aware of the misstatements.
C)Purchaser was not in privity of contract with Larson.
D)Identity of the purchaser was not known to Larson at the time of the audit.

Question

Quizplus · Accepted Answer

The best defense for Larson would be to demonstrate that the audit was conducted in accordance with generally accepted auditing standards, which would indicate that they exercised due professional care.

While Conducting an Audit,Larson Associates,CPAs,failed to Detect Material Misstatements Included