- Walter Young, doing business as Walter Young Fashions, engaged the CPA partnership of Small \& Brown to examine his financial statements: During the examination, Small \& Brown discovered certain irregularities which would have indicated to a reasonably prudent accountant that James Smith, the head bookkeeper, might be engaged in a fraud. More specifically, it appeared to Small \& Brown that serious defalcations were taking place. However, Small \& Brown, not having been engaged to dis cover defalcations, submitted an unqualified opinion in their report and did not mention the potential defalcation problem.

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What are the legal implications of the above facts as they relate to the relationship between Small \& Brown and Walter Young? Explain.