Lancaster & Company, CPAs, is auditing the financial statements of Cooper Corporation. During the course of the audit, Cooper sent the following memo to the engagement partner:
“We have requested $1 million worth of products from Ladd Corporation with credit terms of net 30 days. Ladd has requested audited financial statements for its credit decision. We notified Ladd that our annual audit was in process and we would provide the audited financial statements to them as soon as they were completed.”
Which of the following statements is true with regard to this memo?
A. It is an amendment to the engagement letter and makes Ladd a primary beneficiary of the audited financial statements.
B. It may move Ladd closer to a primary beneficiary and reposition it as a third party with a standing to sue, depending on the jurisdiction of any future lawsuits.
C. It is only a courtesy and does not alter the terms of the engagement letter or change the nature of Ladd’s standing to sue.
D. It is an additional contract placing Ladd in privity of contract.
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