Sun Corp.approved a merger plan with Cord Corp.One of the factors that led to the approval of the merger was the fact that the Cord's financial statements were audited by Frank & Co.CPAs.Sun had engaged Frank to audit Cord's financial statements.While performing the audit,Frank failed to discover certain irregularities that later caused Sun to suffer substantial losses.For the lawsuit to be successful,Sun must prove that Frank & Co. ,CPAs ________.

Question

Quizplus · Accepted Answer

Sun Corp. must prove that Frank & Co., CPAs failed to exercise due care in auditing Cord Corp.'s financial statements. They do not necessarily need to prove that the CPA firm had knowledge of the irregularities, acted with gross negligence, or acted with scienter (intent to deceive). The key issue is whether the CPA firm met the professional standard of care in conducting its audit.

Sun CorpApproved a Merger Plan with Cord Corp