Which of the following correctly states the current law resulting from the Grant

Question

Which of the following correctly states the current law resulting from the Grant Thornton v. Prospect High Income Fund case?

a. A CPA who publishes audited financial statements in Texas is liable for fraud to those who give notice to the CPA prior to publication of the financial statements. Such a CPA is not liable for holder losses. Nor is such a CPA liable for losses suffered by users of such financial statements who the CPA could reasonably foresee using the financial statements but who did not give the CPA notice of their use of the financial statements prior to publication. b. A CPA who publishes audited financial statements in Texas is liable for negligence to those who give notice to the CPA prior to publication of the financial statements. Such a CPA is not liable for holder losses. Nor is such a CPA liable for losses suffered by users of such financial statements who the CPA could reasonably foresee using the financial statements but who did not give the CPA notice of their use of the financial statements prior to publication. c. A CPA who publishes audited financial statements in Texas is liable for breach of contract to those who give notice to the CPA prior to publication of the financial statements. Such a CPA is not liable for holder losses. Nor is such a CPA liable for losses suffered by users of such financial statements who the CPA could reasonably foresee using the financial statements but who did not give the CPA notice of their use of the financial statements prior to publication. d. A CPA who publishes audited financial statements in Texas is liable for negligence to those who give notice to the CPA prior to publication of the financial statements. Such a CPA is liable for holder losses. Such a CPA is liable for losses suffered by users of such financial statements who the CPA could reasonably foresee using the financial statements but who did not give the CPA notice of their use of the financial statements prior to publication. e. None of the other choices are correct.

Explanation / Answer

Answer is Option B, A CPA who publishes audited financial statements in Texas is liable for negligence to those who give notice to the CPA prior to publication of the financial statements. Such a CPA is not liable for holder losses. Nor is such a CPA liable for losses suffered by users of such financial statements who the CPA could reasonably foresee using the financial statements but who did not give the CPA notice of their use of the financial statements prior to publication.

Suprement Court reversed the judgement set up in the case of Blue Bell and adopted the decision in McCamish, Martin, Brown & Loeffler v. F. E. Appling Interests . Itt asserted that a plaintiff must be "a known person" who relied upon the auditor's representations for "a known purpose." By known person we shall conclude here that person must have given notice to CPA that he will rely upon his audit report for his decision to hold his investment in the company or not(or as the case may be)

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