Hello, 1. If an auditor is associated with an S-1 filed under the Securities Act of...
Hello,
1. If an auditor is associated with an S-1 filed under the Securities Act of 1933 and a lawsuit arises, what would the plaintiff need to prove?
2. What type of defenses are available to the auditor?
Homework Answers
1) The plintiff must show
- Economic loss
- Auditors failed to exercise appropriate level of care
- F/S contained a material misstatement
- loss caused by reliance on misststed F/S
2)The defenses for the auditor include :
- Lack of appropriate standing (relationship with the auditor) to bring suit
- third party loss caused by factors otherthan theF/S and auditor's examination (causation defense)
- Audit conducted as per GAAP(due diligence )
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