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3. An auditor issued an unqualified opinion on the financial statements that failed to disclose that a significant portion of the accounts receivable was uncollectible.
3. An auditor issued an unqualified opinion on the financial statements that failed to disclose that a significant portion of the accounts receivable was uncollectible. The auditor also failed to follow the professional auditing standards in conducting the audit with respect to inventory. The auditor knows that the client needs the audit in order to obtain a loan. Shortly after the audit was released and used, the client declared bankruptcy. Required: Under what conditions would a creditor who relied on these audited financial statements and loaned money to the client recover the losses he has suffered? Briefly discuss citing the legal justification
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