Question

Turtle was audit partner on ABC Accounting's audit of Jemison Corporation. Turtle knew that the audit was ineptly performed, although he hoped (without much reason) that the financial statements were accurate. He certified them as such. Which of the following is true?

A) Turtle is immune from any legal consequences.
B) Turtle could only face civil liability, not criminal.
C) If Turtle acted willfully, he could be held criminally liable under federal securities laws.
D) Turtle can be held liable for the inept performance of the audit, but not for the certification.

Answer 1

Audit partner Turtle, if he knowingly and willfully certified inaccurate financial statements, could face criminal liability under federal securities laws, despite believing they were accurate.

Step-by-step explanation:

If an audit partner like Turtle knowingly certifies inaccurate financial statements, despite being aware of the poor quality of the audit, there may be serious legal implications. Whether Turtle believed in the financial statements' accuracy without much basis, the act of certifying ineptly audited financials can lead to liability. Answer C is correct; if Turtle acted willfully in certifying the flawed audit, he could face criminal liability under federal securities laws. This is because willful certification of false financial statements is a serious offense that can mislead investors and affect market decisions.