Singh, Shah, Amaro and Brown in an accounting firm. Singh gave the other partners written notice that he was leaving the partnership on March 31. The other partners purchased Singh's interest and agreed that he would not be liable for any future partnership debts. At the end of May, it was discovered that Shah had, during the previous month, made various investments on behalf of a couple of clients. The investments were unsecured and theclients lost over $250 000.None of the other partners were aware of Shah's activities although the firm had occasionally invested funds on behalf of clients in the past.

^i. Who is responsible for the clients' losses?

ii. What precautions could the partners have taken to prevent this situation?