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A CPA Firm Has Audited the Financial Statements Included in a Form

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Essay

A CPA firm has audited the financial statements included in a Form S-1 filed with the SEC under the Securities Act of 1933.Shortly thereafter,the company went bankrupt and a class action lawsuit was filed by the initial investors against the CPA firm.
a.What should the plaintiff investors attempt to prove?
b.Must the plaintiffs prove that they relied on the financial statements included in the Form S-1?
c.What must the CPA firm prove in order to be successful with respect to the firm's defense?


Definitions:

Confidence Interval

A range of values, derived from sample data, that is believed to contain the true population parameter with a certain level of confidence.

Logistic Regression

A statistical method used for predicting the outcome of a binary variable based on one or more predictor variables.

Probability

The probability of an event happening.

Success

The accomplishment of an aim or purpose.

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