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Krim, president and CEO of United Co., engaged Smith, CPA, to audit Uniteds financial statements so that United could secure a loan from First Bank.

Krim, president and CEO of United Co., engaged Smith, CPA, to audit Uniteds financial statements so that United could secure a loan from First Bank. Smith issued an unqualified opinion on May 20, but the loan was delayed. On August 5, on inquiry to Smith by First Bank, Smith, relying on Krims representation, made assurances that there was no material change in Uniteds financial status. Krims representation was untrue because of a material change after May 20. First relied on Smiths assurances of no change. Shortly afterward, United became insolvent. If First sues Smith for negligent misrepresentation, Smith will be found

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