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Posted By: warshawlaw

I know squat about other jurisdictions but it seems to me that any certifying company could be held liable under negligence theory in CA. Since PSA is a CA company, the issue is of more than academic value. In CA we analyze the issue in terms of duty not privity. If you undertake a certifying role that you can reasonably anticipate will result in third parties relying on your views, you can be held liable for your negligence in forming those views. There have been several such cases involving CPAs certifying bogus financials and being sued by investors who were duped as a result.