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Q. Smith also Industry, CPAs, performed the audit work for a large corporation in connection with their registration statement. Smith also Industry performed the work according to all appropriate professional standards, but the corporation had cleverly made the inventory look much greater than it actually was. Because the industry did not have as much inventory as was indicated on the financial statements, the industry was worth much less than it appeared to be. Smith also Industry has been named in a lawsuit under Section 11 of the Securities Act of 1933. Even though Smith also Industry properly performed the audit, also the fraud on the part of the corporation was such which it would not be uncovered by an audit, Smith also Industry cannot prove any of this in court because all of its audit working papers also computer documentation was accidentally shredded. Discuss Smith also Industry's legal/liability situation.
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