A CPA issued a standard opinion (unmodified opinion) on the financial statements of a public corporation that
Question:
A CPA issued a standard opinion (unmodified opinion) on the financial statements of a public corporation that issued shares for the first time in accordance with the provisions of the SEC Act of 1933. On the grounds that the financial statements were in error, an investor who bought shares of that first issue sued the CPA. Which of the following actions represents a possible defense for the CPA in this case?
a. The investor did not rely on the financial statements.
b. The investor has not proven ordinary negligence on the part of the CPA.
c. The error is insubstantial (immaterial) when examined within the set of financial statements.
d. The CPA discovered the error in the financial statements after the audit report was issued.
Financial and Managerial Accounting the basis for business decisions
ISBN: 978-0078111044
16th edition
Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello