The following quotation was in the court ruling in the case of the Public Employees’ Retirement Association of Colorado v. Deloitte & Touche, LLP:
It is not an accountant’s fault if its client actively conspires with others in order to deprive the accountant of accurate information about the client’s finances. It would be wrong and counter to the purposes of the Private Securities Litigation Reform Act to find an accountant liable in such an instance.
a. Evaluate this statement from the perspective of the scienter requirements discussed in the text.
b. Explain the implications of the PSLRA for audit responsibilities and auditor legal liability.