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CIMAPRA17-BA4-1 Exam - Topic 3 Question 62 Discussion

M wrote to A (Accountants), asking if he could rely on the firm's audit report of B Ltd. M told A (Accountants), confidentially, that he was considering making a take-over bid for B Ltd. A (Accountants) advised M that he could rely on the report. As a result, M relied on the report and purchased the entire share capital of B Ltd. M has now discovered that he has paid considerably more for the shares than they were worth, as the company's stock had been negligently over-valued in the audit report.Which of the following is correct?
C) M cannot hold A (Accountants) responsible, as he did not pay for their advice.
A) M cannot recover compensation from A (Accountants) in tort, as they only owe a contractual duty to B Ltd.
B) M can sue A (Accountants) in the tort of negligence as they knew that M intended to rely on their report and the purpose for which he intended to use it.
D) M can recover damages from A (Accountants) for breach of contract.

CIMAPRA17-BA4-1 Exam - Topic 3 Question 62 Discussion

Actual exam question for CIMA's CIMAPRA17-BA4-1 exam
Question #: 62
Topic #: 3
[All CIMAPRA17-BA4-1 Questions]

M wrote to A (Accountants), asking if he could rely on the firm's audit report of B Ltd. M told A (Accountants), confidentially, that he was considering making a take-over bid for B Ltd. A (Accountants) advised M that he could rely on the report. As a result, M relied on the report and purchased the entire share capital of B Ltd. M has now discovered that he has paid considerably more for the shares than they were worth, as the company's stock had been negligently over-valued in the audit report.

Which of the following is correct?

Show Suggested Answer Hide Answer
Suggested Answer: C

by Devorah at Dec 06, 2022, 04:02 PM

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Lashaunda
8 months ago
C seems off, just because he didn't pay doesn't mean he can't hold them accountable.
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Reiko
9 months ago
Definitely B, they knew M would rely on it!
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Rikki
9 months ago
Surprised M thought he could rely on that report without paying for advice.
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Luke
9 months ago
I disagree, M should be able to sue for negligence!
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Lenita
9 months ago
A is right, they only owe a duty to B Ltd.
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Rupert
9 months ago
I keep getting mixed up about contractual duties versus tort duties. I wonder if A could be right since they only owe a duty to B Ltd.
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Tonja
9 months ago
This scenario feels similar to a practice question we did on reliance and duty of care. I think B makes the most sense here.
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Reynalda
9 months ago
I'm not entirely sure, but I think the fact that M didn't pay for the advice might make C a possibility.
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Princess
9 months ago
I remember discussing how auditors owe duties to third parties in certain situations, so I think B could be the right answer.
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Carman
10 months ago
This one seems pretty straightforward. I'm thinking the answer is C, enabling the virtual machine firewall, since that's a standard security practice and not a high-risk operation.
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Chun
10 months ago
Data is the raw facts and figures, while information is what we derive from analyzing and interpreting that data. Gotta remember that distinction.
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Glory
10 months ago
The key is remembering the specific media interfaces that Genesys supports. I'll eliminate the ones I'm unsure about and focus on the two I'm most confident in.
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Dottie
10 months ago
Hmm, this looks like a tricky one. I'll need to carefully read through the question and the SignatureDefs to figure out the correct way to structure the predict request.
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Elvera
10 months ago
I think we focused on preventive and detective measures in class, so I might lean towards option B.
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Maryrose
1 year ago
Option C is clearly wrong. M didn't have to pay for the advice, but he still suffered the consequences of relying on it. The accountants should be held responsible.
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Billi
1 year ago
Haha, I bet the accountants are kicking themselves for giving M that report. They probably thought they were getting a juicy takeover fee, but now they're facing a lawsuit instead!
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Monroe
1 year ago
It's a tough situation for everyone involved, especially with the potential lawsuit.
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Nenita
1 year ago
User 3: M must be furious for overpaying for the shares.
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Cassi
1 year ago
User 2: They should have been more careful with their audit report.
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Ines
1 year ago
I think M might have a case against the accountants for negligence.
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Julieta
1 year ago
M must be really upset about overpaying for B Ltd.
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Reita
1 year ago
Yeah, the accountants should have been more careful with their audit report.
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Tyra
1 year ago
User 1: I can't believe the accountants didn't see this coming.
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Julie
1 year ago
But what about the contractual duty to B Ltd? Does that matter?
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Dierdre
1 year ago
I'm not sure why M can't recover damages for breach of contract. The accountants were aware of the purpose for which their report would be used, so they should be liable for the consequences.
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Argelia
1 year ago
D) M can recover damages from A (Accountants) for breach of contract.
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Jacklyn
1 year ago
I'm not sure why M can't recover damages for breach of contract. The accountants were aware of the purpose for which their report would be used, so they should be liable for the consequences.
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Sherell
1 year ago
B) M can sue A (Accountants) in the tort of negligence as they knew that M intended to rely on their report and the purpose for which he intended to use it.
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Brendan
1 year ago
A) M cannot recover compensation from A (Accountants) in tort, as they only owe a contractual duty to B Ltd.
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Barbra
1 year ago
Option B seems to be the correct answer. The accountants owed a duty of care to the third party, M, who they knew would rely on their report for the purpose of a takeover bid.
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Elsa
1 year ago
I agree with Major, A (Accountants) knew M was relying on their report.
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Major
1 year ago
I think M can sue A (Accountants) in the tort of negligence.
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