While auditing the financial statements of Foible Corp. (which statementsare to be included in a Securities Act
Question:
While auditing the financial statements of Foible Corp. (which statementsare to be included in a Securities Act registration statement), Ernie, a certified public accountant, fails to review any of Foible's journal entries, does not read the minutes of the meetings of the board of directors, and does not speak with the comptroller of Foible. Consequently, Ernie does not discover that substantial loans, which went unmentioned in the financial statements and footnotes thereof, had been made to Foible officers. As a result, the registration statement omits any mention of the loans. Assuming the omitted fact is a material one and that Ernie is not an officer or director of Foible, does Ernie face potential liability under the Securities Act of 1933?
Principles of Auditing and Other Assurance Services
ISBN: 978-0078025617
19th edition
Authors: Ray Whittington, Kurt Pany