DQ1 week2.docx - 1 5-27(Objectives 5-5 5-6 Part 1 Whitlow Company is a brokerage firm registered under the Securities Exchange Act of 1934 The act

DQ1 week2.docx - 1 5-27(Objectives 5-5 5-6 Part 1 Whitlow...

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1. 5-27 (Objectives 5-5 , 5-6) Part 1 . Whitlow & Company is a brokerage firm registered under the Securities Exchange Act of 1934. The act requires such a brokerage firm to file audited financial statements with the SEC annually. Mitchell & Moss, Whitlow’s CPAs, performed the annual audit for the year ended December 31, 2016, and rendered an unqualified opinion, which was filed with the SEC along with Whitlow’s financial statements. During 2016, Charles, the president of Whitlow & Company, engaged in a huge embezzlement scheme that eventually bankrupted the firm. As a result, substantial losses were suffered by customers and shareholders of Whitlow & Company, including Thaxton, who had recently purchased several shares of stock of Whitlow & Company after reviewing the company’s 2016 audit report. Mitchell & Moss’s audit was deficient; if they had complied with auditing standards, the embezzlement would have been discovered. However, Mitchell & Moss had no knowledge of the embezzlement, nor can their conduct be categorized as reckless.
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  • Fall '14
  • Stock exchange, U.S. Securities and Exchange Commission, Whitlow and Company, theories of liability

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