47.2 Overton v. Todman & Co., CPAs If Todman had conducted an audit for DBI but

Question

47.2 Overton v. Todman & Co., CPAs
If Todman had conducted an audit for DBI but had not issued a certified opinion about DBI’s financial statements, would the result in this case have been the same?
Did Overton have a valid reason to sue DBI’s auditors? Why or why not?
Spotlight on Accountant's Duty to Correct Mistakes Case 47.2 Overton v. Todman &Co.;,CPA United States Court of Appeals, Second Circuit, 478 F.3d 479 (2007). Background and Facts From 1999 through 2002, Todman& Company, CPAs, P.C., audited the financial statements of Direct Brokerage, Inc. (DBI), a broker-dealer in New York registered with the Securities and Exchange Commission (SEC). Each year, Todman issued an unqualified opinion that DBI's financial statements were accurate. DBI filed its statements and Todman's opinions with the SEC. Case 47.2 Continues

Explanation / Answer

Answer:

It is a primary responsibility of accountant to issue certified opinion on the financial statement audited by him. If the accountant did not issue certified opinion then it a breach of his responsibility. If the accountant is unable to obtain sufficient information to draw his opinion on financial statement due to any reason then also he is required to issue disclaimer opinion. Disclaim opinion is no opinion in itself.

However the case mentioned is different from the Overton v. Todman & Co, in which the accountant has made significant error that leads to making investment by overturn in DBI.

In this case there is no certified opinion issued and no question of making investment based on the certified opinion of accountant on DBI.

Here in this case DBI can sue Todman & Co for not issuing certified opinion.

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