Which of the following is the best defense auditors can assert in a suit for common law fraud based on their unqualified opinion on materially misstated financial statements?
A)Contributory negligence on the part of the client.
B)A disclaimer contained in the engagement letter.
C)Lack of privity.
D)Lack of scienter.

Question

Quizplus · Accepted Answer

The best defense auditors can assert in a suit for common law fraud based on their unqualified opinion on materially misstated financial statements is lack of scienter or lack of intent to deceive or defraud. This defense emphasizes that the auditors did not have prior knowledge of the misstatement or did not intentionally ignore the red flags that could have alerted them to the misstatement. The other options - contributory negligence, a disclaimer in the engagement letter, and lack of privity - may not be sufficient or applicable in a fraud case.

Which of the Following Is the Best Defense Auditors Can