Auditors' Responsibility in Accuracy and Due Diligence
The defense raised by the accountants in the case of the audit report for Paschal Enterprises presented to Shatterproof Glass Corp. is not likely to be valid because the accountants must understand their report may be relied upon by third parties, especially when they are aware that it will be used to induce lending. The responsibility falls upon the accountants to ensure accuracy and due diligence in their reporting.
This scenario is akin to the case of the researcher Stapel, whose co-authors should have identified statistical discrepancies in the data they were presented with. Similar to how Stapel's co-authors were expected to have a fundamental understanding of statistics, James, Guinn, and Head, as certified public accountants, should possess and apply a foundational knowledge of their practice when preparing audit reports to prevent negligent misrepresentation.