Major, Major & Sharpe, CPAs, are the auditors of MacLain Technologies. In connectionwith the public offering of $10 million of MacLain securities, Major expressed anunqualified opinion as to the financial statements. Subsequent to the offering, certainmisstatements were revealed. Major has been sued by the purchasers of the stockoffered pursuant to the registration statement that included the financial statementsaudited by Major. In the ensuing lawsuit by the MacLain investors, Major will be ableto avoid liability if(1) the misstatements were caused primarily by MacLain.(2) it can be shown that at least some of the investors did not actually read theaudited financial statements.(3) it can prove due diligence in the audit of the financial statements of MacLain.(4) MacLain had expressly assumed any liability in connection with the public offering.
Major, Major & Sharpe, CPAs, are the auditors of MacLain Technologies. In connection
with the public offering of $10 million of MacLain securities, Major expressed an
unqualified opinion as to the financial statements. Subsequent to the offering, certain
misstatements were revealed. Major has been sued by the purchasers of the stock
offered pursuant to the registration statement that included the financial statements
audited by Major. In the ensuing lawsuit by the MacLain investors, Major will be able
to avoid liability if
(1) the misstatements were caused primarily by MacLain.
(2) it can be shown that at least some of the investors did not actually read the
audited financial statements.
(3) it can prove due diligence in the audit of the financial statements of MacLain.
(4) MacLain had expressly assumed any liability in connection with the public offering.
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