MaryJane's Smoke Shoppe, Inc. has operated for the past six years without the benefit of an accountant or bookkeeper. With the legalization of marijuana, MaryJane's hires the CPA firm Earnest and Whiney to sort out its financial records and books. Six months ago, Earnest and Whiney prepared audited financial statements of MaryJane's and rendered an unqualified opinion. Earnest and Whinex.s opinion failed to reflect MaryJane's precarious financial position MaryJane's gave Earnest and Whinex.s. audit opinion to Last National Bank. The Bank loaned MaryJane's $10 million based on Earnest and Whiney's opinion. The following year MaryJane's went into bankruptcy. There is no evidence that MaryJane's acted improperly before, during, or after the audit.. 13. Suppose that Last National Bank sues Eamest and Whiney for negligence in California. What is the likely result? Last National Bank must prove that it was in privity or a privity-like relationship. 1 with Earnest and Whiney to prevail . Last National Bank wins if it was reasonably foreseeable to Earnest and Whiney that it would rely on the financial statements if prepared for MaryJane's. Last National Bank wins if it is amongst a limited class of intended uses for whose benefit the financial statements were prepared. Last National Bank only needs to establish is that its damage was caused by Earnesto and Whiney s failure to act as a reasonable CPA firm. a 14. Suppose that MaryJanes.s, sues Earnest and Whiney's for damages. What is the likely result? Earnest and Whiney win if it proves that it performed the audit in good faith. b Earnest and Whiney wins because it did not intentionally fail to discover Mary Jane si precarious financial condition- Mary Janes.s. wins if Earnest and Whiney failed to conduct its audit as a reasonable CPA- fum would have acted. MaryJane's wins only if Eamest and Whiney acted recklessly C