5-18 (Objectives 5-3, 5-4, 5-5, 5-6) Following are 8 statements with missing terms

involving auditor legal liability.

1. Under the Ultramares Doctrine, an auditor is generally not liability for _____ to
third
parties lacking _____.
2. The auditor will use a defense of _____ in a suit brought under the 1933 Securities
Act.
3. After passage of the Private Securities Litigation Reform Act, auditors generally
have
_____ liability in federal securities cases.
4. The broadest class of third parties under common law is known as _____.
5. Based on the ruling in Hochfelder v. Ernst & Ernst, an auditor generally must have
knowledge and _____ to be found guilty of a violation of Rule 10b-5 of the 1934 Act.
6. Under the 1933 Act, plaintiffs do not have to demonstrate _____ , but need merely
demonstrate the existence of a _____.
7. _____ is generally only available as a defense in suits brought by clients.
8. A third party lacking privity will often be successful in bringing a claim against the
auditor if they can demonstrate_____ or _____.