Question

Which of the following statements about the Securities Act of 1933 is not​ true? A. A...

Which of the following statements about the Securities Act of 1933 is not​ true?

A.

A third party that purchased securities described in the registration statement may sue the auditor for material misrepresentations or omissions in the audited financial statements.

B.

A​ third-party user has the burden of proof that the auditor was either negligent or fraudulent in doing the audit.

C.

A​ third-party user does not have the burden of proof that the loss was caused by the misleading statements.

D.

A​ third-party user does not have the burden of proof that​ he/she relied on the financial statements.

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Answer #1

Correct answer is c

C) A third-party user has the burden of proof that the auditor was either negligent or fraudulent in doing the audit.

To avoid liability, auditors have the burden of proving that they conducted a proper, loss was caused by factors other than the misleading financial statements.,may recover from a person whom he has not bought, in respect of a statement ,auditors could not be held liable to third parties for ordinary negligence

The CPA has liability for ordinary negligence to third parties not specifically ,negligence is only to a limited class of known or intended users of the audited , that misleading financial statements were not the proximate cause of the plaintiffs' losses.

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