Question
Your client has filed suit against you CPA firm, alleging that the auditors negligence was responsible for failure to disclose a large defalcation that had
Your client has filed suit against you CPA firm, alleging that the auditors negligence was responsible for failure to disclose a large defalcation that had been in process for several years. Your CPA firm responded that it may have been negligent, but the company was really to blame because it had completely ignored the CPA firms repeated recommendations for improvements in internal controls. If the firm was negligent, is it responsible for the loss sustained by the client? Does the failure by the client to follow the auditors recommendation for better internal controls have any bearing on the question of liability?
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