Spratt,an accountant,deliberately falsified a financial statement she was preparing for Aniline Industries.Gladden and Jarvis invested in Aniline based on the statement.A banker at Kidston National Bank also relied on the statement in deciding to make a loan to Aniline.When Gladden,Jarvis,and Kidston National Bank learned of the deception,they told Spratt that they were going to bring suit against her.Spratt told them that a court would never rule in their favor because they were not known third parties.Was Spratt correct? Why or why not?

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Cathy Galloway · Accepted Answer

Final Answer : It depends on the jurisdiction.Many states make an accountant who prepares a fraudulent financial statement liable to anyone who can be reasonably foreseen as relying on that statement.In these jurisdictions,a court would most likely find that Gladden,Jarvis,and the banker at Kidston were reasonably foreseeable classes of individuals and,therefore,hold Spratt liable to them for preparing a fraudulent financial statement.

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