Cast Art Industries, LLC v. KPMG, LLP
New Jersey Supreme Court
36 A.3d 1049 (2012)
- Written by Rose VanHofwegen, JD
Facts
Cast Art Industries, LLC (plaintiff) (CAI) relied on audited financial statements prepared by accounting firm KPMG, LLP (defendant) when acquiring another company, Papel Giftware. KPMG began auditing Papel’s financials in 1997 and had already begun auditing 1998 and 1999 statements when CAI started discussing the merger with Papel. CAI’s president testified that a KPMG representative assured him the audits would be forthcoming in a conference call. CAI provided copies of the audited financials to the bank to obtain a $22 million loan to finance the acquisition. Soon thereafter CAI had trouble collecting Papel’s reported accounts receivable, then discovered that the 1998 and 1999 statements KPMG audited were inaccurate because Papel regularly accelerated its revenues. CAI brought an accounting malpractice suit against KPMG, arguing its audits should have revealed the irregularities. The jury awarded CAI $31.8 million, but the appellate court partially reversed, prompting a further appeal.
Rule of Law
Issue
Holding and Reasoning (Wefing, J.)
What to do next…
Here's why 805,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 46,300 briefs, keyed to 988 casebooks. Top-notch customer support.
- The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
- Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
- Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.
