Explain the case and auditing issues involved?

Also identify and explain if a business failure or audit failure or both involved.

FIGURE 5-5 Rusch Factors v. Levin (1968)-Liability to Third Parties The plaintiff, Rusch Factors, a lender, asked the defendant auditor to audit the financial statements of a company seeking a loan. The auditor, Levin, issued an unqualified opinion on the financial statements, indicating that the company was solvent when, in fact, it was insolvent. The plaintiff loaned the company money, suffered a subsequent loss, and sued the auditor for recovery. The auditor's defense in the case was based on the absence of privity on the part of Rusch Factors. The court found in favor of this plaintiff. Although the court could have found in favor of Rusch Factors under Ultramares in that it was a primary beneficiary, it chose to rely on the Restatement of Torts stating that the auditor should be liable for ordinary negligence in audits where the financial statements are relied on by actually foreseen and limited classes of persons