Question
Kevin, Katherine and Fiona formed the KKF Firm, LLP for the practice of public accountancy in New York.On behalf of the firm, Kevin conducted an
Kevin, Katherine and Fiona formed the KKF Firm, LLP for the practice of public accountancy in New York.On behalf of the firm, Kevin conducted an audit of the financial statements of ABC Corporation, a publicly traded company, for the fiscal year ended December 31, 2020. He was the engagement partner on the audit and he supervised Austin, a manager on this audit.Austin made a major error on the audit and as a result the firm certified that the financial statements were properly prepared when indeed, as a result of Austin's error, the liabilities of the corporation were vastly under- stated and the assets were vastly over-stated resulting in the financial statements presenting a false financial view of the corporation.When this error was revealed, the share price of the company dropped from $50/share to .05/share.The stock exchange halted trading on the company.As a result of all this, the shareholders sued KKF, LLP, and all three partners individually for $50 million in damages.Kevin defended by stating that since the firm was a limited liability partnership, he had no personal liability because his supervisee, Austin, committed the error, not him.Is Kevin right or wrong?
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