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15 art 6 (continued) Types of Third parties parties. Classify the independent situations shown below as (b) Foreseen; or (c) Foreseeable (reasonably foreseeable). 1. A potential purchaser of a business who asks for audited In class we noted that there are different types of third either (a) Primary beneficiary (Identified User: Near Privity): financial statements of that business and is known to the auditor. 2. A potential purchaser of a business who asks for audited financial statements of that business and is NOT known to the auditor. However, the auditor knows that his or her client has asked for an audit because of an intention to sell the business. 3. A purchaser of a business who, not known to the auditor, relied on the audited financial statements to help make the decision to buy the business. The auditor had been led to believe that the client would use the financial statements only for a bank loan. 4. A local bank which, as a condition of a bank loan, requires that audited financial statements be furnished to it by the borrower' s auditors. There is no other reason for the audit. The auditor is aware of the need for the audit (bank loan) and that the auditor's report will be given to the local bank. s. A vendor who sold inventory to a company. Answers: Type of third Party Use letters! 4

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