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Did ahmad and partner owe a duty of care to xing investments

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Reference no: EM132472390

Ahmad & Partners is a public accounting firm in eastern Canada. Last year, it audited Chan Corporation, a publicly traded company that manufactures automobile component parts. Although the company has been profitable for many years, Ahmad & Partners was hired by Canada Bank, which was considering extending a large loan to Chan. The bank wanted the audit because Chan's expansion plans would change the company's financial structure significantly from the previous year. Ahmad & Partners conducted the audit and gave an unmodified opinion. Xing Investments Inc. purchased $750,000 of the common stock of Chan, intending to hold the stock as a long-term investment.

Unfortunately, Chan went bankrupt shortly after the share purchase and Xing Investments lost all of its $750,000 investment. Canada Bank was unable to recover any of its loan to the company. Xing Investments and Canada Bank subsequently sued Ahmad & Partners to recover their losses.

Required

Question a. Did Ahmad & Partners owe a duty of care to Xing Investments?

Question b. What are some of the arguments Ahmad & Partners could make in their defence?

Reference no: EM132472390

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