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Differentiate between ordinary and gross negligence

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An auditor is sued for negligence by the stockholders of an audit client. The auditor had issued an unqualified opinion on the client's financial statements. It was later determined that the statements were materially distorted due to errors and fraud.

Required:

Question 1: Under what conditions, in common law may an auditor be held liable to third parties for negligence?

Question 2: Describe two approaches for differentiating between ordinary negligence and gross negligence. Cite examples to support your approaches.

Question 3: Who will prevail in the present case?

Reference no: EM132594179

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