Under common law, which of the following statements most accurately reflects the liability of a CPA who fraudulently gives an opinion on an audit of a client's financial statements?
a.
The CPA is liable only to known users of the financial statements.
b.
The CPA probably is liable to any person who suffered a loss as a result of the fraud.
c.
The CPA probably is liable to the client even if the client was aware of the fraud and did not rely on the opinion.
d.
The CPA is liable only to third parties in privity of contract with the CPA.
Choice "B" is correct. A CPA who commits fraud is liable to anyone who is injured by the fraud.
Choice "d" is incorrect. A CPA's liability for fraud is not limited by privity.
Choice "a" is incorrect. A CPA's liability for fraud is not limited to known users of the CPA's work product.
Choice "c" is incorrect. Actual and justifiable reliance are necessary elements of fraud.
