Austin LLP,a CPA Firm,audits Financial Statements of Cooley Company

question 34

Essay

Austin LLP,a CPA firm,audits financial statements of Cooley Company.Cooley tells Austin that the statements will be used to sell preferred shares in a registered offering under the Securities Act of 1933.Austin is concerned about its potential liability under Section 11 of the Securities Act of 1933 for mistakes in the audited financial statements.Discuss Austin's due diligence defense under Section 11.

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Definitions:

Multifactorial Inheritance

A pattern of inheritance in which a trait is influenced by both genes and environmental factors.

Genotype

An individual’s genetic makeup.

Phenotype

An individual’s actual characteristics.

Motor Neurons

Specialized neurons that initiate and conduct impulses to muscles and glands, facilitating movement and secretion.