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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) isthe same as ordinary negligence by including two to fourlegal liabilities associated with these terms

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3.6 Ratings (293 Votes)
Solution The Term Privity implies the relationship which depends on an agreement or understanding for which one of the gathering can sue the other for the rupture of terms of agreement Near Privity implies there Is no lawful connection between the two gatherings yet one gathering Is relylng on the report    See Answer
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