Because of the third party rights according to the Securities Act of 1933, the auditor had greater burden in that he or she must demonstrate that (Select all that apply.)

A.

an adequate audit was conducted.

B.

the statements were not materially misstated.

C.

a review of the annual Form 10-K was performed before it was filed with the SEC.

In contrast, the liability of auditors under the 1934 Act is

even harsher than

not as harsh as

virtually unchanged

under the 1933 Act. In this instance, the burden of proof is on

management to show that the statements were not materially misstated

the auditors to show that the audit was conducted in good faith

third parties to show that they relied on the statements and that the misleading statements were the cause of the loss

.

Many lawsuits involving accountants' liability under

Rule 10b-5

Rule 10-K

Section 5

Section 10-6

have resulted in accountants being liable when they knew all of the

foreseeable users

performance requirements

relevant facts

third parties

,

but merely made poor judgments. In recent years, however, courts have decided that poor judgement

.