Dexter and Co., CPAs, issued an unqualified opinion on the 20X3 financial statements of Bart Corp. Late in 20X4, Bart determined that its treasurer had embezzled over $1,000,000. Dexter was unaware of the embezzlement. Bart has decided to sue Dexter to recover the $1,000,000. Bart's suit is based upon Dexter's failure to discover the missing money while performing the audit. Which of the following is Dexter's best defense?
A) That the audit was performed in accordance with GAAS.
B) Dexter had no knowledge of the embezzlement.
C) The financial statements were presented in conformity with GAAP.
D) The treasurer was Bart's agent and as such had designed the controls which facilitated the embezzlement.
Correct Answer:
Verified
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