Statuary Law
Securities Act of 1933
In the Securities Act of 1933, under section 11 an accountant is liable for omitting or misstating material facts in a registration statement. In our case, the CPA negligently failed to detect inaccurate misrepresentation of net sales and profit as any other reasonable accountant would. In addition, the CPA intentionally omitted material information regarding irregular entries that suggested bribing. Under the Securities Act of 1993, Section 11 any person who bought Cardozo stock after IPO is eligible to sue, even those who did not utilize the prospectus to make a decision.
On the other hand, on the second part of the engagement, the CPA failed to uncover a complex embezzlement scheme, where he is not liable …show more content…
Any violation of the 1993 Act will result criminal liabilities. In our case, the CPA willingly omitted the material information of bribing and could be held criminal liable. In regards to the 1934 Act, the CPA did not commit any wrongdoing by failing to detect the embezzlement scheme in the proxy statements.
Tax Law
Tax law is applicable in the case since the CPA was employed by Cardozo to render tax advice, which included the use of tax shelters in the Cayman Islands. While this method is widely used by corporations in the United States and it can be labeled as legal, if these are abusive tax shelters, the CPA can be liable for suggesting or participating in such …show more content…
This rule applies if the individual is has been a perpetrator of two predicate offenses within a 10 year period. Some of these offenses includes mail fraud, bribery, and security law violations. In our case, the CPA discovered bribery before the IPO but omitted this information in the report. If the CPA acted with scienter and intentionally omitted the material information, then it is a case of securities law violations and, the first know offense by the CPA. However, the auditor must take part in the fraud operation, in order to be liable under RICO. Since during the second part of the engagement the CPA did not violate any securities law or other offenses, then RICO rule would not apply in this
Securities Act of 1933
In the Securities Act of 1933, under section 11 an accountant is liable for omitting or misstating material facts in a registration statement. In our case, the CPA negligently failed to detect inaccurate misrepresentation of net sales and profit as any other reasonable accountant would. In addition, the CPA intentionally omitted material information regarding irregular entries that suggested bribing. Under the Securities Act of 1993, Section 11 any person who bought Cardozo stock after IPO is eligible to sue, even those who did not utilize the prospectus to make a decision.
On the other hand, on the second part of the engagement, the CPA failed to uncover a complex embezzlement scheme, where he is not liable …show more content…
Any violation of the 1993 Act will result criminal liabilities. In our case, the CPA willingly omitted the material information of bribing and could be held criminal liable. In regards to the 1934 Act, the CPA did not commit any wrongdoing by failing to detect the embezzlement scheme in the proxy statements.
Tax Law
Tax law is applicable in the case since the CPA was employed by Cardozo to render tax advice, which included the use of tax shelters in the Cayman Islands. While this method is widely used by corporations in the United States and it can be labeled as legal, if these are abusive tax shelters, the CPA can be liable for suggesting or participating in such …show more content…
This rule applies if the individual is has been a perpetrator of two predicate offenses within a 10 year period. Some of these offenses includes mail fraud, bribery, and security law violations. In our case, the CPA discovered bribery before the IPO but omitted this information in the report. If the CPA acted with scienter and intentionally omitted the material information, then it is a case of securities law violations and, the first know offense by the CPA. However, the auditor must take part in the fraud operation, in order to be liable under RICO. Since during the second part of the engagement the CPA did not violate any securities law or other offenses, then RICO rule would not apply in this