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.CAs.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. ,CAs ________.

Question

Quizplus · Accepted Answer

In order to succeed in the lawsuit, Sun only needs to prove that Frank & Co. failed to exercise due care in their audit of Cord Corp's financial statements. They do not necessarily need to prove that the auditors knew of the irregularities, acted with scienter, or were grossly negligent. The key factor is whether or not they met the standard of care expected of them as certified public accountants.

Sun CorpApproved a Merger Plan with Cord Corp