Do Audit Reports Really Matter? The Case of BDO’s Audit of AmTrust

ABSTRACT BDO USA, P.C. (“BDO”) is a national accounting firm headquartered in Chicago, IL. BDO issued unqualified opinions on AmTrust’s financial statements every year from 2005 to 2015. After AmTrust later restated the 2012–2015 financial statements, some shareholders filed a class action lawsuit against the Company, its executives, and BDO. The Court dismissed BDO from the lawsuit based on its conclusion that BDO’s audit opinion was not material. The Court’s decision raises important questions about the value of the auditor’s report and financial statements more broadly. This case is designed for use in the undergraduate or graduate audit classroom to assist students in critically examining the importance of auditors and their opinions. After completing this case study, students will be able to assess the usefulness of auditor reports. The students will be in a better position to defend the importance of audit reports in a context where there are opposing viewpoints. JEL Classifications: M42.