Name this case:
Management , including top management, was involved in a massive fraud that increased the value of inventory - allowing the client to borrow at a lower interest rate and obtain higher fire insurance. When an employee of the client discovered and reported the fraud, stockholders won in a class action lawsuit.
Years later, the client sued the CPA firm for breach of contract, professional negligence, and fraud. The CPA firm's main defense was that the auditors attempted to follow up on indications of fraud, management's tactics to cover it up prevented the firm from discovering the fraud. The CPA firm won on the basis that management's wrongdoing was a valid defense against the charges.
Cenco Inc. v Seidman & Seidman (1982)