Near privity differs from privity in that:
A) The plaintiff has standing in cases where the wrongdoing is less severe than fraud.
B) The auditor must know the plaintiff.
C) The plaintiff must show that (s)he relied on the financial statements.
D) All of the above.

Question

Quizplus · Accepted Answer

Near privity allows for a broader range of plaintiffs to have standing in legal actions against auditors compared to strict privity, which requires a direct contractual relationship. Near privity includes situations where the auditor is aware that the financial statements are to be used by a specific party (the plaintiff), who then relies on those statements. This encompasses situations beyond severe fraud, requires the auditor's awareness of the plaintiff's use of the financial statements, and necessitates the plaintiff's reliance on these statements, thus making all the provided options correct.

Near Privity Differs from Privity in That