A is corrent because a third-party (primary) beneficiary of audited financial statements is one specifically intended by the CPA and the client to be the primary user of the financial statements. The CPA will be liable for negligence to a third party only if it can be established that the party was intended to be the primary beneficiary. Since a CPA is generally liable to all third parties, including foreseen and foreseeable third parties, for fraud and constructive fraud, the third-party (primary) beneficiary rule is relevant only in those cases based on negligence.
B is incorrect. The third-party (primary) beneficiary rule is relevant only in those cases based on negligence.
B is incorrect. The third-party (primary) beneficiary rule is relevant only in those cases based on negligence.
D is incorrect. The third-party (primary) beneficiary rule is relevant only in those cases based on negligence.
