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very by third party who are considered as foreseen users. A foreseen user is the limited class of users who the auditors were aware the user has the intention to rely on the financial statements. For example, the bank who lend loan to company will be a foreseen user.

Coopers was also sued under the Securities Exchange Act of 1934. The burden of proof is not the same under the Securities Acts of 1933 and 1934. Identify the important differences and discuss the primary objective behind the differences in the laws (1933 and 1934) as they relate to auditor liability?

For the case under the Securities Acts of 1933, the plaintiff have to prove that the audited financial statements were consisted material misstatement which caused the plaintiff suffered a loss. If the auditor faces an unusual burden of proof, auditor must demonstrate as a defense. The defenses are about the auditor had been conducted an adequate audit and the loss of plaintiff was caused by another reasons which other than the misleading financial statements.

Under Securities Acts of 1934, the plaintiff must prove the reliance on financial statements where the financial statement consist material misstatement which caused in a loss.

The Securities Acts 1933 had exposes the auditor to more litigation risk than the Securities Acts 1934. This change is to protect the buyers of new securities.

In this case, even though neither Phar-Mor's management, the plaintiffs' attorneys, nor anyone else who associated with the case ever alleged the auditors knowingly participated in the fraud, a jury had found that Cooper liable under fraud claim. The important key of this fraud charge is the plaintiffs had been alleged that Cooper made representations which recklessly without regard to whether they were true or false. This had enabled plaintiffs to sue the auditors in term of fraud.

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