Parente, Randolph, Orlando & Associates (Parente) is an accounting firm that had done auditing work for Sparkomatic for nearly 20


Parente, Randolph, Orlando & Associates (Parente) is an accounting firm that had done auditing work for Sparkomatic for nearly 20 years. On June 14, 1993, Sparkomatic entered into a Memorandum of Intent with Williams Controls to sell Williams assets from Sparkomatic’s Kenco division. The sale price was to be the “audited book value” of the assets, and the book value would be based on the June 30, 1993, balance sheet (which Parente did not prepare). Sparkomatic then engaged Parente to audit the financial statements for December 31, 1990, 1991, and 1992 and to prepare an interim balance sheet for 1993.
On August 1, 1993, Sparkomatic and Williams Controls entered into an asset purchase agreement, which required that Williams be furnished financials through June 1993 as prepared by “Sparkomatic’s independent public accountant.” Parente was not identified by name in the agreement. Parente did review the asset purchase agreement with Williams prior to commencing its work and knew that Williams would be using the information Parente prepared.
Following the closing, additional information came to light indicating that Williams had overpaid for the assets of Kenco, and Williams filed suit against Parente for negligence, negligent misrepresentation, and breach of contract. Parente moved for summary judgment. What should the decision be and why? Discuss several possible theories. [Williams Controls v. Parente, Randolph, Orlando, & Associates, 39 F. Supp. 2d 517 (M.D. Pa.)]

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...

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Andersons Business Law and the Legal Environment

ISBN: 978-1133587583

22nd edition

Authors: David P. Twomey, Marianne M. Jennings

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Question Posted: June 06, 2014 09:41:48