Question

Jones, CPA, is in court defending himself against a lawsuit filed under the 1933 Securities Act. The charges have been filed by purchasers of securities covered under that act. If the purchasers prove their required elements, in general Jones will have to prove that:

Answer 1

Answer: The correct answer is "He performed the audit with due diligence".

Explanation:  If the purchasers prove their required elements, in general Jones will have to prove that: He performed the audit with due diligence.

The objective of a due diligence audit is to serve as a support and element of judgment in the process of quantitative and qualitative evaluation of acquisition or merger transactions between two or more entities. Due diligence is essential to know the value of a company.