In reference to the case of Credit Alliance Corp. v. Arthur Anderson & Co., what did the court rule regarding the effort to hold the defendant liable on a third-party reliance theory

In reference to the case of Credit Alliance Corp. v. Arthur Anderson & Co., what did the court rule regarding the effort to hold the defendant liable on a third-party reliance theory? 
A. The plaintiff was allowed to recover because the Ultramares Rule was applied.
B. The plaintiff was not allowed to recover because the Carroll Rule was applied.
C. The plaintiff was allowed to recover because it was a foreseen user.
D. The plaintiff was allowed to recover because it was in a foreseen class of users.
E. The plaintiff was not allowed to recover because the court did not find the necessary link between the plaintiff and the accounting firm.

According to the court, "There is simply no allegation of any word or action on the part of Andersen directed to Credit Alliance, or anything contained in Andersen's retainer agreement with Smith which provided the necessary link between them. We therefore dismiss the charges against Arthur Andersen."

Which of the following is true regarding the number of states that have adopted the Restatement Test of accountant liability for negligence to third-parties? 
A. None because there is no Restatement test
B. All the states
C. About half the states
D. One-fourth of the states
E. Only a few states

About half the states have adopted the Restatement test.

Which of the following is true regarding the liability of accountants under the law of Canada? 
A. In Quebec, a plaintiff who can prove fault, damage, and a causal link between the two has sufficient grounds for a court to hold the accountant liable.
B. The Ontario Securities Act gives purchasers of securities in the primary market a right of action for damages against auditors for misrepresentations in their reports, opinions, or statements included in or referred to in the prospectus with the auditors' filed consent.
C. The Ontario Securities Act was amended to expand auditors' statutory liability to include misrepresentations in secondary-market disclosures made with the auditors' written consent.
D. All the above
E. In Quebec, a plaintiff who can prove fault, damage, and a causal link between the two has sufficient grounds for a court to hold the accountant liable. The Ontario Securities Act gives purchasers of securities in the primary market a right of action for damages against auditors for misrepresentations in their reports, opinions, or statements included in or referred to in the prospectus with the auditors' filed consent. Liability in regard to secondary-market disclosures, however, is not allowed.

In Quebec, a plaintiff who can prove fault, damage, and a causal link between the two has sufficient grounds for a court to hold the accountant liable. The Ontario Securities Act gives purchasers of securities in the primary market a right of action for damages against auditors for misrepresentations in their reports, opinions, or statements included in or referred to in the prospectus with the auditors' filed consent. The Ontario Securities Act was amended to expand auditors' statutory liability to include misrepresentations in secondary-market disclosures made with the auditors' written consent.

What is the rational behind the Restatement Test of accountant liability to third-parties? 
A. There is no such test.
B. It is only fair to hold accountants liable if they are in privity with a plaintiff.
C. Much of what accountants do is prepare work for parties that are not their clients and therefore, it makes sense for accountants to owe a duty to intended receivers.
D. Potential investors should have a route of recovery even if they could not be foreseen by accountants.
E. The general public should have a route of recovery even if they could not be foreseen by the accountant.

Much of what accountants do is prepare work for parties who are not their clients; therefore, it makes sense for them to owe a duty to these intended receivers. The test extends liability to those people, or the class of people, the accountant foresaw or should have foreseen as being the recipients of and relying on his or her work.

Which of the following is viewed as a middle ground test in regard to accounting liability to third-party users? 
A. The Privity Rule
B. The Near Privity Rule
C. The Restatement Test
D. The Ultramares Rule
E. The Reasonably Foreseeable Users Rule

The Restatement test is a middle-ground test between the very restrictive, pro-accountant primary-benefit test represented by Ultramares and the liability-expanding reasonably foreseeable users test.