An auditor issued an unqualified opinion on financial statements that failed to disclose that a significant portion of the accounts receivable was uncollectible. The auditor also failed to follow professional auditing standards with respect to inventory. The auditor knew that the client would use the financial statements to obtain a loan. The client subsequently declared bankruptcy. Under what concepts might a creditor, who loaned money to the client based on the financial statements, recover losses from the auditor?

An auditor issued an unqualified opinion on financial statements that failed to disclose that a significant portion of the accounts receivable was uncollectible. The auditor also failed to follow professional auditing standards with respect to inventory. The auditor knew that the client would use the financial statements to obtain a loan. The client subsequently declared bankruptcy. Under what concepts might a creditor, who loaned money to the client based on the financial statements, recover losses from the auditor?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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