There have been several instances in the financial world where third parties such as banks, investors, financial institutions and creditors have been harmed by opinions of auditors regarding the accuracy and reliability of financial statements. The stakeholders of a company make decisions based on financial statements of that company. If the financial statements are not accurate and present values which are distorted from original values the resulting decisions could cause severe problems for the decision maker. The auditor’s opinion is a key element which ensures that the financial statements are accurate, reliable and present truthful values. The accountant has a major responsibility in preparing and presenting financial information to users of financial statements in an accurate and reliable manner.
The case under study here is Ultra mares Corporation vs. Touché and deals with the issue of damages caused by improper presentation of false financial information. Touché was a firm of public accountants who were hired by Fred Stern & Co. to prepare the accounts and balance sheet of the company and certify on its accuracy. Fred Stern & Co. was in the business of importing and selling rubber to several customers. In order to carryout business operations in a smooth manner the company borrowed money from several sources including banks.
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