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Concurring Partner May Be Held Responsible for Audit Errors
Description Appeals court upheld SEC finding of improper conduct by concurring partner who failed to investigate the peculiar audit done of a property being considered for sale. His willingness to accept what he was told by the company constitutes recklessness.
Topic Accountant's Liability
Key Words Concurring Partner, Improper Professional Conduct
C A S E   S U M M A R Y
Facts Potts appealed an SEC finding that he had engaged in improper professional conduct and so would be suspended from practicing before the SEC for nine months. Potts was a partner at Deloitte & Touche. He served as the concurring partner for several audits of a company, who had substantially misreported the profitability of one of its properties that was considered for a prospective sale.
Decision Affirmed. According to the AICPA, "the role of a concurring partner is to provide a second-level review and thus afford further assurance that the audited company's financial statements conform with" GAAP and GAAS. SEC properly found Potts's conduct seriously deficient for approving audits that clearly did not meet accepted standards. His acceptance of the company's "word" about the value of the property sustains a finding of recklessness.
Citation Potts v. Securities and Exchange Comm., 1998 WL 436864 (---F.3d---, 8th Cir.)
151 F.3d 810 (8th Cir., 1998)

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