Foreseeable third parties are those who:
A) Are potential users of the financial statements.
B) Are potential plaintiffs in legal actions against auditors.
C) Increase the potential liability for auditors.
D) All of the above.

Question

Quizplus · Accepted Answer

Foreseeable third parties are those who are likely to rely on the financial statements for making economic decisions, and thus they have a potential interest in the information provided by auditors. Therefore, they could be potential users of the financial statements (Choice A). However, if there are material misstatements in the financial statements, such third parties could suffer economic harm and might initiate legal actions against auditors, making them potential plaintiffs (Choice B). As a result, auditors may face increased potential liability (Choice C). Hence, all of the above choices are correct, and the best answer is D.

Foreseeable Third Parties Are Those Who