No duty in a bid

Article Abstract:

The UK Court of Appeals has ruled in the case of James McNaughton Paper Group Ltd v Hicks Anderson & Co, The Times, that there was no duty of care required to a bidder by accountants preparing draft accounts on short notice. Although the draft accounts contained errors, the Court ruled that the accountants were not liable for the errors which materially influenced a takeover bid by the plaintiff. The accountants had been asked to prepare the accounts as soon as possible, but the Court concluded that for there to be a duty of care established there must be a relationship between the adviser, the recipient of the accounts who relies on it, and the preparers of accounts, which did not exist in this case. The case displays a need for proximity to establish liability, and is a victory for the accounting profession.

Accountants, Malpractice

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Audit evidence and the brides in the bath

Article Abstract:

The goal of an audit is to establish the credibility of financial statements by making an expert, unbiased investigation of the evidence. An auditor then gives an 'auditor opinion' that must be supported by evidence which the auditor must examine. It is up to the auditor to decide what must be analyzed in order to give an opinion. The steps an auditor takes in devising an opinion can be summarized as follows: burden of proof; evidence and reliability; the auditor's approach; and analytical review.

Laws, regulations and rules, Accounting and auditing, Auditing, Evidence (Law)

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