Slides Royal Bank Geng Ajan Punye

7/30/2019 Slides Royal Bank Geng Ajan Punye

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Content

The Pursuers' Pleading

The Defenders Submissions

Subsequent Event

Court Decision


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The Third PartyRoyal Bank of Scotland

The DefenderThe Auditor of APC company

The First PartyAPC & APC Civil


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Briefing Case

The Bank provided working capital to

two companies (APC & Civil) in term of :

1 ) Lending Money to the companies

through overdraft facilities and term loans

2 ) purchase shares in the APC

The Audit Report prepared by the Auditor

Referring


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The Auditor prepare a negligence Audit

Report which expenses of the companyhad been capitalised.

Subsequently, APC goes to receivership

and the bank suffered the losses : theshares bought by the auditor have novalue and the bank suffer cash losses upto 19,629,000

The Bank intend to sue the auditorregarding their losses


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The Pursuers' Pleadings

THE STANDARD

OF CARE

BREACH OF

DUTY OF CARE

CASUAL

RELATIONSHIP DAMAGES


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BREACH OF

DUTY OF CARE

THE STANDARDOF CARE

The defenders staff, Mr Mc Mahontransferred some of the purchases and

expenses of the company to thebalance sheet item and the defenderfinalized theiraudit report after that.

The auditor have a duty of care toprepare audit report to the plaintiff

since they know that the companyheavily reliant on its bank overdraftswith the plaintiff. The plaintiff requireaudit report before grant any bank

overdrafts.



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CASUAL

RELATIONSHIP

DAMAGES

The auditor report that prepared byauditor is using by the plaintiff asreferences for the loan facilities.

The plaintiff incurred loss. The plaintiffshare in APC have no value and the

plaintiff suffer cash losses up to19,629,000



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The Court Held :

In reference to the Caparo case, the court held thatwhen the auditors did not disclaim theirresponsibility relating to the audited accounts, theycould be held owing a duty of care to a third partyif they knew ( or ought to have know ) that thethird party would rely on the audited accounts forlending decision


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Subsequent Events :

Disclaimer Pharagraph

should be add

in the auditor s report

The InternationalAudit Standard

subsequently changed

too.


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ExampleofDisclaimerSentences

it is our responsible to form an independent opinion,

based on our audit, on the financial statements and to

report to you as a body in accordance with Section 174 ofthe companies Act 1965 and for no other purposes. We do

not assume responsibility to any other person for the

content of this report


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THANK YOU

Documents

Slides Royal Bank Geng Ajan Punye