Tenants Corporation vs. Max Rothenberg and Company.CPA Legal Liability

Question

David · Accepted Answer

Liability for “Unaudited” Financial Statements 
Tenants’ Corp. v. Max Rothenberg and Company: 
It is a landmark case for the accountants’ liability where there is association of them with the unaudited 
financial statements.  Case demonstrated importance of the engagement letters which clearly 
establishes an understanding with client regarding nature of services which is to be provided.  Also it 
illustrated need for following up on the unusual findings even in case the audits is not performed by the 
CPAs. 
Real estate management agent engaged a CPA firm for $600 per year for preparing a tax return, 
financial statements, and a schedule which shows apportionment of the real estate’s taxes of 1136 
Tenants Corporation (cooperative apartment house). Statements were sent to the tenants periodically. 
Statements sent included words unaudited, and also there was cover letter which states that “the 
statements were prepared from books and the records of cooperative and also none of the independent 
verifications taken thereon “.During period of engagement i.e., from 1963 to year 1965 , manager of 
firm embezzled funds from tenants of cooperative . Tenants sued CPA firm for the negligence and the 
breach of the contract for the failure to find fraud.

Tenants Corporation vs. Max Rothenberg and Company. CPA Legal Liability

Solution

Answer To This Question Is Available To Download

Related Questions & Answers

Submit New Assignment