Final answer:
Mac Bank must prove that Beckler was negligent in the audit and that their reliance on the financial statements caused them to extend the loan that resulted in their loss.
Step-by-step explanation:
In the case where Mac Bank sued Beckler Associates (the CPA firm) due to a loan default by Queen Co., there are certain key elements Mac must prove in order to recover losses from the CPA firm. First, Mac must establish that Beckler was negligent in conducting the audit that led to the unqualified opinion on the financial statements, despite them containing material misstatements. Second, it must be proven that Mac's reliance on the financial statements was a significant factor in the decision to extend the loan to Queen. The bank must show that if the financial statements had been accurate, they would not have issued the loan, thus establishing causation between the audit report and their loss.
It is not necessary for Mac to prove that Queen Co. intentionally provided false financial statements, nor is it necessary to prove that Mac Bank did not perform due diligence, although those elements can influence the case. The burden is primarily on proving auditor negligence and reliance on the audited financial statements as the cause of the loss.