Chapter 4, Problem 31OQ

Match the important cases listed below with the appropriate legal precedent or implication.

Case:

1. a.      Hochfelder v. Ernst
2. b.      Escott v. BarChris Construction Corp.
3. c.       Credit Alliance v. Arthur Andersen & Co.
4. d.      Ultramares v. Touche & Co.
5. e.       Rosenblum v. Adler
6. f.        Rusch Factors, Inc. v. Levin
7. g.      United States v. Simon (Continental Vending)

Legal precedent or implication:

1. 1. A landmark case establishing that auditors should be held liable to third parties not in privity of contract for gross negligence, but not for ordinary negligence.
2. 2. A case in which the court used the guidance of the Second Restatement of the Law of Torts to decide the auditors’ liability to third parties under common law.
3. 3. A landmark case in which the auditors were held liable under Section 11 of the Securities Act of 1933.
4. 4. A case in which auditors were held liable for criminal negligence.
5. 5. A case that established that auditors should not be held liable under the Securities Exchange Act of 1934 unless there was intent to deceive.
6. 6. A case that established the precedent that auditors should be held liable under common law for ordinary negligence to all foreseeable third parties.
7. 7. A common law case in which the court held that auditors should be held liable for ordinary negligence only to third parties they know will use the financial statements for a particular purpose.