In this article, Princeton partner Vince Gentile discusses the rationale behind and implications of the Pennsylvania Supreme Court’s ruling in Official Committee of Unsecured Creditors of Allegheny Health Education and Research Foundation v. PricewaterhouseCoopers LLP (AHERF). The decision establishes that that the imputation defense is unavailable to a corporation’s outside auditor who is alleged to have knowingly and actively assisted the corporation’s managers to render fraudulent financial reports. Vince, a partner in the Commercial Litigation Practice Group, notes that the decision is not altogether bad news for the auditor defense bar because it also holds that Pennsylvania law continues to allow the auditor to assert the imputation defense to claims of simple audit negligence.
Source: Law360