Siti & Co, is the auditor of Heng Sdn Bhd., a company that trades in hardware products. Upon completion of the audit, the auditors supplied Heng with 20 copies of audited financial statement. The audit firm knew in a general way that he wanted that number of copies of the auditor's report to furnish to banks and other potential lenders.

The financial statement in question were misstated by approximately RM500,000. Instead of having a net worth of RM400,000 the company was insolvent. The management of Heng had falsified the books to avoid bankruptcy. The assets had been overstated by RM400,000 of fictitious investment and RM100,000 of non-existing inventory. The audit failed to detect these fraudulent entries. Zack, a major supplier, relied on the audited accounts and extended a loan of RM200,000 to Heng Sdn Bhd. He seeks to recover his loss from Siti & Co.

Required:

Discuss whether Zack be able to recover his loss from Siti & Co.