Question
Simon & Shaw, a CPA firm, issued an unmodified audit report for its client, Zing Manufacturing Corporation (ZMC), a footwear manufacturer with shares traded on
Simon & Shaw, a CPA firm, issued an unmodified audit report for its client, Zing Manufacturing
Corporation (ZMC), a footwear manufacturer with shares traded on a Canadian stock exchange.
Simon & Shaw knew the company was in the process of refinancing a significant bank loan
coming due and the bank was anxious to see the year end results. Once the unmodified audit
report and opinion was issued, the local stock exchange regulator halted trading of ZMC shares
after allegations of management fraud came to light. As a result, the share price of ZMC plummeted and the company fell into bankruptcy.
Question?
Document four (4) criteria the bank must demonstrate to establish negligence by Simon &
Shaw?
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Financial Accounting Tools for Business Decision Making
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso, Barbara Trenholm, Wayne Irvine
6th Canadian edition
1118644948, 978-1118805084, 1118805089, 978-1118644942
