Question

To be successful in a legal action against an auditor, the client who asserts breach of contract should demonstrate: (Check all that apply).

O Fraud in the financial statements
O Suffered an economic loss
O Non-negligence
O Auditors breached the contract
O Auditors failed to exercise the appropriate level of care

Answer 1

To be successful in a legal action against an auditor for breach of contract, the client must demonstrate non-negligence, an economic loss, the auditors breached the contract, and the auditors failed to exercise the appropriate level of care.

Step-by-step explanation:

To be successful in a legal action against an auditor for breach of contract, the client should demonstrate several things:

1. Non-negligence: The client needs to show that they did not contribute to the breach of contract.
2. An economic loss: The client must have suffered a financial loss as a result of the auditor's breach of contract.
3. The auditors breached the contract: The client must show that the auditors failed to fulfill their obligations as outlined in the contract.
4. The auditors failed to exercise the appropriate level of care: The client needs to demonstrate that the auditors did not meet the required standard of care expected in their profession.