Negligence and beyond

Article Abstract:

Alexander v Cambridge Credit Corp Ltd is a 1985 Australian court case in which Cambridge's disgruntled investors claimed that auditors' failure to detect errors in Cambridge's financial statements resulted in their losing substantial sums of money. The case resulted in a judgment against the defending firm of auditors for A$145 million in damages. Although the case highlights such risky areas for auditors as permitting financial statements to lack economic substance, it is especially noteworthy because of its detailed judicial reasoning on the question of causal relationship between breach of duty and damage or loss. Details of the case, including summaries of each judge's reasoning on the issue of causality, are presented.

Auditors, Cambridge Credit Corp.

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ED 28: review of financial statements

Article Abstract:

A proposed international auditing guideline for the review of financial statements has been issued by the International Auditing Practices Committee. The use and purpose of engagement letters is described. The purpose of the review is to form a reasonable basis for limited assurance that no material modifications are required of an entity's accounts. The review includes inquiries into the accounting principles used, and analyses of the relationships and items that appear to be unusual. The procedures for reporting the review are also discussed.

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On the audit liability trail

Article Abstract:

An overview of early litigation and the accounting profession's response is presented. Contrary to popular opinion that accounting lawsuits are a modern development, there is a long history of this type of litigation.

Legal issues & crime, Accounting Methods, Legal/Government Regulation, Company legal issue, History, Accounting, Accounting fraud

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