Smart Issued an Unmodified Auditor's Opinion on the 2012 Financial

Multiple Choice

Smart issued an unmodified auditor's opinion on the 2012 financial report of Max Ltd, which was filed with ASIC.Smart did not detect material misstatements in the financial report as a result of negligence in the performance of the audit. Based upon the financial report, Bird purchased shares in Max Ltd. Shortly afterwards, Max Ltd
Became insolvent, causing the price of the shares to decline drastically. Bird has commenced legal action
Against Smart for damages. Smart's best defence to such an action would be that:

A) Bird lacks a contractual relationship as a basis to sue.
B) the engagement letter specifically disclaimed all liability to third parties.
C) there is no proof of proximity.
D) there has been no subsequent sale for which a loss can be calculated.