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An auditor issued an unqualified opinion on financial statements that failed to disclose that a significant portion of the inventory of the client is obsolete
An auditor issued an unqualified opinion on financial statements that failed to disclose that a significant portion of the inventory of the client is obsolete and many have been is shelves for a long time. The auditor knew that the financial statements would be used to obtain a loan from a bank. The client subsequently declared bankruptcy. Required: Under what concepts might a creditor who loaned money to the client on the basis of the financial statements recover losses from the auditor? Briefly explain
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