Business: Accounting Case

Four years ago Ultramares Corp. of London, on the strength of the financial statement of Fred Stern & Co., Inc. of Manhattan, loaned Fred Stern & Co. money. Fred Stern & Co. soon went bankrupt. It was learned that the audit had been faulty. The audit had been made by Touche, Niven & Co. Ultramares Corp. brought a $203,000 suit against Touche, Niven & Co. All accountants have watched the case closely, thinking it would establish a precedent in the question of what responsibility auditors must shoulder.

Last week the Court of Appeals in...

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