National Bank was deciding whether to loan money to Pateo Corporation. It asked Pateo to provide a copy of the company’s most recent audit. While doing the audit, the auditors, Hamble & Humphries,...

National Bank was deciding whether to loan money to Pateo Corporation. It asked Pateo to provide a copy of the company’s most recent audit. While doing the audit, the auditors, Hamble & Humphries, failed to follow up on evidence indicating that one of the firm’s managing partners might be siphoning money out of the corporation’s funds. Relying on the audit, the bank made the loan. Six months later Pateo went into bankruptcy, primarily because one partner had stolen funds from the corporation and had then fled the country. Can the bank bring an action against Hamble & Humphries? Why is your answer dependent on the state in which the case arose?