Auditing & Assurance Services 6th Edition by Timothy Louwers

Exercise 312

Section 11( b ) of the Securities Act of 1933 provides that individuals can be sued and may be liable for investors' losses in connection with a public securities offering under which of these circumstances?
A) The chairman of the board of directors performed a reasonable investigation of facts in connection with preparing the section in the registration statement concerning the specification of the use of the proceeds of the offering.
B) A consulting engineer performed a reasonable investigation and reported in the registration statement on the feasibility of construction of a roadway to be financed with the offering proceeds.
C) The president of the issuing entity had no reason to doubt the report of the consulting engineer, although the president did not perform a separate reasonable investigation of her own.
D) The officers of the issuing entity were relieved that the independent auditors did not make an issue about the excessive valuation of inventory held to support construction in progress.