Testimony at Trial Helped Accounting Firm Defend an $850 Million Lawsuit

Background & Challenges

A state regulator filed suit against an accounting firm alleging that the firm was negligent in its failure to identify financial issues behind the state’s then largest ever insurance company collapse. The plaintiff was seeking damages of up to $850 million.

Approach

BDO served as witness on behalf of the firm in connection with determining whether the firm complied with generally accepted auditing standards (GAAS). The primary issue in the case was related to the firm’s audit work pertaining to the property and casualty insurance company’s loss reserves. A BDO partner provided witness testimony at deposition and trial.

Client Impact

After a five-week trial, a six-member jury found in favor of the firm. The BDO team was instrumental in demonstrating that the firm performed its audit of the insurance company in accordance with GAAS, and therefore was not negligent held liable for any damages.