Becon associates had a substancial portion of its assets(73 percent ) invested with bernard madoff empire funds invested tends of millions of dollars in beacon. throughout this time period. friedberg, smith & co, an accounting firm, was responsible for performing annual audits of beacon's financial statements and each year would issues its auditors report of beacons. the reports represented that the audit included an examination of evidence supporting the amounts and disclosures in the financial statements, assessed the accounting principles used and estimates made by management and evaluated the overall financial statement of beacon presendted fairly the financial position and the results of beacons operations and changes in net assets in conformity with generally accepted accounting principles. none of friedberg, smiths 's audit reports disclosed any concerns regarding the reported value of the empire funds' capital accounts with beacon. after madoff's ponzi scheme became public, it was discovered that more than 330 million in assets that madoffs claimed to have purchased with beacon funds did not exist. empire funds sued the accounting firm , arguing that the accounting firm's negligiences in auditing beacon;s fianncial statements caused empire funds to suffer losses when it relied on those audit reports to decide whether to invest in beacon, specifically, empire funds assets that friedberg, smiths audits failed to give any indication that the assets invested with maddoff might b nonexistent or that the reported value of those investments could innacurate or fictitious. should the auditor be found liable for empire funds losses under the near privity approach? explain

Answer rating: 100% (QA)

The auditor can be found liable for empire fund losses under the Near Privity approach Near Privity ... View the full answer