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1.         Mortimore Beancounter, CPA, is employed by the accounting firm Doolittle & Prosper, LLP. He...

1.         Mortimore Beancounter, CPA, is employed by the accounting firm Doolittle & Prosper, LLP. He was assigned to audit Cook & De’Books, Inc. Failing to discover that the company’s financial statements contained a material mistake, Mortimore rendered an unqualified audit opinion. Unbeknownst to Mortimore, Cook & De’Books later used the statements and his opinion to secure a loan from Last National Bank. Cook & De’Books subsequently went bankrupt. Cook & De’Books and the Bank later sue Mortimore and Doolittle & Prosper for negligence.

What is the likely result of the lawsuit between Cook & De’Books and Last National Bank and state why?

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Answer #1

In here Cook & De'Books, Inc is a Client, so they can sue against Mortimore and Doolittle & Prosper for negligence and if it is a successful law suet they will get claim. The Last National Bank is a third party user, they can also sue against auditor for their loss. some of details regarding this, I have given bellow.

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