Shouldbe Company engaged the accounting firm of Money Money to audit financial statements to be used in connection with an interstate public offering of securities The audit was completed and an unqualified opinion was expressed on the financial statements that were submitted to the SEC along with the registration statement Two hundred thousand shares of Shouldbe common stock was sold to the public at $11 per share Eight months later the stock fell to $2 a share when it was disclosed that several large loans to two paper corporations (corporations with no operations) 100 owned by one of the directors were worthless (The loans were secured by the stock of the borrowing corporations ) These facts were not disclosed in the financial statements The director involved and the two corporations are insolvent True False The Securities Act of 1933 applies to the above described public offering of securities Money Money has potential liability to any person who acquired the stock Under the 1933 Act, investors who bought shares in ShouldBe need only show that they sustained a loss and that failure to explain the nature of the loans in question constituted a false statement or misleading omission in the financial statements Money Money could avoid liability if the plaintiff cant prove negligence Money Money could avoid or reduce the damages asserted against them if they could establish that the drop in the stocks market price was due in whole or in part to other causes The SEC would defend any action brought against the accountants in that the SEC examined and approved the registration statement For each definition (or portion of definition) in the first column, select the term that best applies Each term may be used only once or not at all Every defendant is fully liable for all assessed damages Failure of a party to a contract to perform in accordance with the contracts provisions An absence of reasonable care in the conduct of an engagement Intent to deceive Unwritten law that has developed through court decisions Written law created by state or federal legislative bodies Extreme departure from professional standards of due care Actions taken with intent to commit fraud Breach of contract Common law Constructive fraud Fraud Joint and several liabilities Negligence Proportionate liability Scienter Securities Act of 1933 Securities Exchange Act of1934 Statutory law Torts

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Posted on Jun 26, 2024

Shouldbe Company engaged the accounting firm of Money & Money to audit financial statements to be used in connection with an interstate public offering of

Shouldbe Company engaged the accounting firm of Money & Money to audit financial statements to be used in connection with an interstate public offering of securities. The audit was completed and an unqualified opinion was expressed on the financial statements that were submitted to the SEC along with the registration statement. Two hundred thousand shares of Shouldbe common stock was sold to the public at $11 per share. Eight months later the stock fell to $2 a share when it was disclosed that several large loans to two paper corporations (corporations with no operations) 100% owned by one of the directors were worthless. (The loans were secured by the stock of the borrowing corporations.). These facts were not disclosed in the financial statements. The director involved and the two corporations are insolvent.

	True	False
The Securities Act of 1933 applies to the above described public offering of securities.
Money & Money has potential liability to any person who acquired the stock.
Under the 1933 Act, investors who bought shares in ShouldBe need only show that they sustained a loss and that failure to explain the nature of the loans in question constituted a false statement or misleading omission in the financial statements.
Money & Money could avoid liability if the plaintiff cant prove negligence.
Money & Money could avoid or reduce the damages asserted against them if they could establish that the drop in the stocks market price was due in whole or in part to other causes.
The SEC would defend any action brought against the accountants in that the SEC examined and approved the registration statement.

For each definition (or portion of definition) in the first column, select the term that bestapplies. Each term may be used only once or not at all.

	Every defendant is fully liable for all assessed damages
	Failure of a party to a contract to perform in accordance with the contracts provisions.
	An absence of reasonable care in the conduct of an engagement
	Intent to deceive
	Unwritten law that has developed through court decisions
	Written law created by state or federal legislative bodies
	Extreme departure from professional standards of due care
	Actionstaken with intent to commit fraud