Problem

A. Paula performed the audit of the financial statements of Abdul Company (a nonpublic ent...

A. Paula performed the audit of the financial statements of Abdul Company (a nonpublic entity currently not subject to filing requirements under the Securities Act of 1933 or Securities Exchange Act of 1934). Abdul is currently considering several alternatives for raising capital, including seeking financing from area banks or an initial public offering of its securities. Which of the following parties would have the lowest likelihood of successfully bringing suit for ordinary negligence against Paula?

A. Abdul Company.

B. Purchasers of Abdul’s securities in an initial public offering.

C. First State Bank, a bank with which Abdul has not previously done business.

D. Simon Whitaker, a private investor who is considering acquiring Abdul.

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