The questions are where it says "21 points, 14 points and 7 points" The reading is to help answer the question.

2) (29 Points) AFG, Inc. is planned to build a new home office in 2021. It planned to finance the expansion through a combination of a bank loan and stock offering. AFG has engaged your CPA firm to audit its 2020 financial statements. They told you that they were going to give the financial statements to a local bank and other, unnamed banks, and that they would be included in the registration statement for the stock offering AFG is publicly traded and subject to US Federal Securities laws. When you performed the audit of the 2020 financial statements, you did not discover a material overstatement of inventory because you did not test AFG's physical inventory at the end of 2020. AFG is a manufacturing firm and so inventory tends to make up a significant portion of their total assets. You were also aware of a pending product liability lawsuit that AFG had not disclosed in its footnotes even though AFG's attorney informed you that AFG would probably lose the lawsuit and even though they couldn't estimate the amount of the loss, it would be material to AGF's financial statements. However, you issued an unqualified opinion on their 2020 financial statements and issued your report at the end of January 2021. In early February 2021, the local bank relied on AFG's financial statements and your audit report and granted AFG a $750,000 loan. In addition, AFG raised $12,000,000 in June 2021 in a public offering of common stock. They included their financial statements and your audit report in their registration statement for the stock offering. By July 2021, AFG was in financial trouble, but was able to stay in business because of the funds raised in the stock offering. They had lost the product liability lawsuit and could not pay the plaintiff the full amount of the loss. In addition, they defaulted on their bank loan and petitioned for bankruptcy. The bank lost most of the $750,000 loan and AFG's stock price fell sharply. The local bank has sued you for failure to exercise duc professional care and for common law fraud. The stockholders who bought the stock from the firm in their public offering also are suing you. All these suits took place in a jurisdiction that provides for auditor liability for ordinary negligence to foreseen third parties but only allows for proportionate liability. Answer the following questions and include your reasons for them. Be thorough and cover all the legal issues that are involved with each question. :) (21 Points) What conditions will the bank need to meet to be successful in their lawsuit against you if they sue based on each of the following conditions? Do you feel they can meet the requirements to prevail and why? If they pre au r amount of the loss 2) (29 Points) AFG, Inc. is planned to build a new home office in 2021. It planned to finance the expansion through a combination of a bank loan and stock offering. AFG has engaged your CPA firm to audit its 2020 financial statements. They told you that they were going to give the financial statements to a local bank and other, unnamed banks, and that they would be included in the registration statement for the stock offering AFG is publicly traded and subject to US Federal Securities laws. When you performed the audit of the 2020 financial statements, you did not discover a material overstatement of inventory because you did not test AFG's physical inventory at the end of 2020. AFG is a manufacturing firm and so inventory tends to make up a significant portion of their total assets. You were also aware of a pending product liability lawsuit that AFG had not disclosed in its footnotes even though AFG's attorney informed you that AFG would probably lose the lawsuit and even though they couldn't estimate the amount of the loss, it would be material to AGF's financial statements. However, you issued an unqualified opinion on their 2020 financial statements and issued your report at the end of January 2021. In early February 2021, the local bank relied on AFG's financial statements and your audit report and granted AFG a $750,000 loan. In addition, AFG raised $12,000,000 in June 2021 in a public offering of common stock. They included their financial statements and your audit report in their registration statement for the stock offering. By July 2021, AFG was in financial trouble, but was able to stay in business because of the funds raised in the stock offering. They had lost the product liability lawsuit and could not pay the plaintiff the full amount of the loss. In addition, they defaulted on their bank loan and petitioned for bankruptcy. The bank lost most of the $750,000 loan and AFG's stock price fell sharply. The local bank has sued you for failure to exercise duc professional care and for common law fraud. The stockholders who bought the stock from the firm in their public offering also are suing you. All these suits took place in a jurisdiction that provides for auditor liability for ordinary negligence to foreseen third parties but only allows for proportionate liability. Answer the following questions and include your reasons for them. Be thorough and cover all the legal issues that are involved with each question. :) (21 Points) What conditions will the bank need to meet to be successful in their lawsuit against you if they sue based on each of the following conditions? Do you feel they can meet the requirements to prevail and why? If they pre au r amount of the loss