Unqualified opining of an auditor means that the auditor has concluded that the financial statements of the company’s operations are fairly presented along with compliance of GAAP. : The concept under which creditor, who gave loan to the auditor’s client, may recover the losses from the auditor.

Question

When creditors who relied on an entity’s audited financial statements suffer monetary lossesafter a customer (the auditors’ client) goes bankrupt, what must the plaintiff creditors in alawsuit for damages show in a court that follows the doctrine in Credit Alliance?a. The auditors knew and specifically acknowledged identification of the creditors.b. The auditors could reasonably foresee them as beneficiaries of the audit because entitiessuch as this client use financial statements to obtain credit from vendors.c. The plaintiffs were foreseen users of the audited financial statements because they werevendors of long standing.d. All of the above

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Chapter 4, Problem 40RSCQ

To determine

Introduction: Unqualified opining of an auditor means that the auditor has concluded that the financial statements of the company’s operations are fairly presented along with compliance of GAAP.

: The concept under which creditor, who gave loan to the auditor’s client, may recover the losses from the auditor.

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When creditors who relied on an entity’s audited financial statements suffer monetary lossesafter a customer (the auditors’ client) goes bankrupt, what must the plaintiff creditors in alawsuit for damages show in a court that follows the doctrine in Credit Alliance?a. The auditors knew and specifically acknowledged identification of the creditors.b. The auditors could reasonably foresee them as beneficiaries of the audit because entitiessuch as this client use financial statements to obtain credit from vendors.c. The plaintiffs were foreseen users of the audited financial statements because they werevendors of long standing.d. All of the above

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