An unmodified audit report for a publicly traded company must include:

1. a reference to PCAOB standards.
2. A reference to the engagement letter.
3. a description of an audit.
4. I and II only.
5. I and III only.

• If an auditor is being sued for common-law fraud by a third party based on materially misleading financial statements, which of the following is the best defense the auditor can assert?
  1. Lack of privity.
  2. A disclaimer contained in the engagement letter.
  3. Contributory negligence on the part of the client.
  4. The auditor followed GAAS.