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Have you often wondered why investors sue the external auditors when massive fraud negatively affects the...

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Accounting

Have you often wondered why investors sue the external auditorswhen massive fraud negatively affects the stock of a public companyup to and including bankruptcy? Often when financial fraud isdiscovered, shareholders attempt to recover their losses by suingthe external audit firm for negligence in not discovering the fraudearlier during a routine attestation engagement. Discuss whetherprivity and near privity (Ultramares Corp. v. Touche) is the sameas ordinary negligence by including two to four legal liabilitiesassociated with these terms

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