An auditor was sued and found guilty of negligence. For each of the following situations, indicate the likelihood the plaintiff would win if the plaintiff is: A financial institution that the auditor knew was the primary beneficiary of the audit, suing under common law. A stockholder suing under common law. A financial institution that was unknown to the auditor loaned money to the client based on the audit financial statements, but the auditor knew only that the client would use the statements to obtain a loan from some financial institution. The plaintiff is suing under common law. An investor suing under the 1934 Securities Exchange Act. An investor suing under the 1933 Securities Act.

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A:

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A: The answer is stated below:

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A: Answer with explanation are as follows.

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A:

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Contingent Liabilities and Provisions

A contingent liability can be defined as a liability the occurrence of which is dependent upon the happening of an uncertain future event. It is generally recorded in the books only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly.