BGH Accounting firm audited the financial statements that were included in E-prise's registration statement.The financial statements overstated sales by 2000%.In conducting the audit,BGH did not comply with generally accepted auditing standards (GAAS).Under Section 11 of the 1933 Act,BGH is liable for any material misstatement or omission in the financial statements they prepared for E-prise.

Question

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Under Section 11 of the 1933 Act, if an accounting firm prepares or certifies any part of a registration statement and the statement contains a material misstatement or omission, the accounting firm is liable. In this case, BGH Accounting firm audited E-prise's financial statements and did not comply with GAAS, resulting in an overstatement of sales. Therefore, BGH is liable for the material misstatement in the financial statements they prepared for E-prise.

BGH Accounting Firm Audited the Financial Statements That Were Included