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 the Securities Act of 1933, BGH is liable for any material misstatement or omission in the financial statements it prepared for E-prise.

Question

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Under the Securities Act of 1933, auditors like BGH Accounting firm are liable for material misstatements or omissions in the financial statements they prepare if they did not comply with generally accepted auditing standards (GAAS), which is the case here with the overstatement of sales by 2000%.

BGH Accounting Firm Audited the Financial Statements That Were Included