{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

L22 Notes_Part_10 - SEC Act of 1934 problem Whitlow Company...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
SEC Act of 1934 problem 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, 2004, and rendered an unqualified opinion, which was filed with the SEC along with Whitlow’s financial statements. During 2004, 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 2004 audit report. Mitchell & Moss’s audit was deficient; if they had compiled with GAAS, the embezzlement would have been discovered. However, Mitchell & Moss had no knowledge of the embezzlement, nor could their conduct be categorized as reckless.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}