After many sleepless nights and a lot of hard work I was seeing the result of several years of sacrifice, I had finally graduated from FIU, one of the best universities in South Florida and was about to achieve every accountant’s goal; to obtain my CPA license. Even though one of the “big four” tried to recruit me, I decided to open my own CPA office in South Beach. To my surprise, I was immediately engaged by Cardozo & Co., a firm that wants to go public.
As an auditor, to the best of my knowledge I reviewed and certified the accuracy of Cardozo & Co.’s financial statements before they were filed with the SEC and distributed to the public before the initial public offering. Included in the financials were various inaccuracies that I failed …show more content…
The registration statement must be filed with the SEC before the initial public offering. An auditor is considered an expert under this section of the law; therefore, I can be held liable for issuing an incorrect opinion on Cardozo & Co.’s financial statements. Investors who purchased shares at the IPO and those who purchased shares in anticipation of the merger can sue me, the auditor, since under section 11 of the Securities Act of 1933 I am an expert who issued an opinion on Cardozo & Co.’s financial statements and they relied on that information to invest on the firm. Just the fact that the investor suffered a loss because of my work, is enough for me to be held liable and pay them back for the damages suffered. The only way for me to avoid liability is to prove that I acted with due diligence. Due diligence is when an auditor investigated and reasonably believed that the opinion issued on the financial statements was correct and no material facts were omitted. Investors can hold me liable under this section of the act because even though I did not come across any evidence to uncover the embezzlement the president of the firm was doing; I did find some irregular entries but I did not investigate or took any action regarding them. I followed GAAP and GAAS when issuing my opinion on the financial statements; nonetheless, I failed to perform an additional review of the statements before they became
As an auditor, to the best of my knowledge I reviewed and certified the accuracy of Cardozo & Co.’s financial statements before they were filed with the SEC and distributed to the public before the initial public offering. Included in the financials were various inaccuracies that I failed …show more content…
The registration statement must be filed with the SEC before the initial public offering. An auditor is considered an expert under this section of the law; therefore, I can be held liable for issuing an incorrect opinion on Cardozo & Co.’s financial statements. Investors who purchased shares at the IPO and those who purchased shares in anticipation of the merger can sue me, the auditor, since under section 11 of the Securities Act of 1933 I am an expert who issued an opinion on Cardozo & Co.’s financial statements and they relied on that information to invest on the firm. Just the fact that the investor suffered a loss because of my work, is enough for me to be held liable and pay them back for the damages suffered. The only way for me to avoid liability is to prove that I acted with due diligence. Due diligence is when an auditor investigated and reasonably believed that the opinion issued on the financial statements was correct and no material facts were omitted. Investors can hold me liable under this section of the act because even though I did not come across any evidence to uncover the embezzlement the president of the firm was doing; I did find some irregular entries but I did not investigate or took any action regarding them. I followed GAAP and GAAS when issuing my opinion on the financial statements; nonetheless, I failed to perform an additional review of the statements before they became