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     EduGorilla 
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    Mr. X, a partner of X & Co. (Chartered Accountants), advised the MD of Z Ltd. to include increased sales amount under negotiations to reflect a better financial position for obtaining bank loan. X & Co. is the internal auditor of Z Ltd. Which among the following propositions regarding the liability of Mr. X is correct?

    Options :-

    1. Mr. X is not liable because he did not issue any written opinion.
    2. Mr. X is liable to the management and not to the third party.
    3. Mr. X is not liable because an internal auditor must act for the utmost benefit of his employer.
    4. Mr. X is liable since he has acted in a negligent manner and there has been a failure to act honestly and reasonably.
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