Hawthorne Corp. entrusted Edgar, an independent accountant, to prepare an audit report to apply for a loan from Daft Corp. Edgar accepted the accuracy of the client's books without proper investigation while representing that he had completed Hawthorne's audit. A careful audit, however, discovers later that an employee of Hawthorne Inc. was regularly embezzling funds. In this scenario, Edgar:

Question

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If an accountant represents that he completed an audit of the client when in reality he merely accepted the accuracy of the client's books without investigation and a careful audit discovers that an employee of the client was regularly embezzling funds from the client, the accountant may be liable in fraud for any losses suffered by the client from the time when the audit should have discovered the embezzlement. In the above case, Edgar is liable to Hawthorne Corp. for any losses it suffered as a result of Edgar's failure to discover the embezzlement.