Final answer:
A CPA may be liable to unknown third parties if they depart from standards of due care during an audit, based on the concept of negligent misrepresentation.
Step-by-step explanation:
If a CPA departs from standards of due care when performing an audit, they may be liable to third parties who are unknown to the CPA. This liability can arise based on the concept of negligent misrepresentation.
Negligent misrepresentation occurs when a professional fails to exercise the degree of skill, care, and diligence expected of them, which results in harm to a third party who relies on their work. In the context of auditing, if a CPA fails to meet the standards of due care, it can lead to a misrepresentation of the financial statements, which can in turn mislead third parties.
For example, if a CPA fails to detect material misstatements in a company's financial statements and issues an unqualified opinion, third parties relying on those financial statements may suffer financial losses. In such cases, the CPA can be held liable to these third parties for the damages caused.