The Courts of Appeal ruled recently on 2 fraud cases where the auditors took some blame for losses experienced by their respective clients.
What are the 2 cases?
- Case 1 – Gaelic Inns vs PlanAssure Public Accounting – I discussed it back in Feb 2007. Take a look. http://accountingwithedgar.blogspot.com/2007/02/denise-ang-and-her-gaelic-victim.html
- Case 2 – JSI Shipping vs TeoFoongWongLCLoong (Tfwl) – Mr John Riggs, the MD of JSI Shipping, made $1.8 million disappeared via its monthly salary! FYI – his salary represented 25% of total staff costs. The Court said “Tfwl should have shown more professional scepticism.” (In another word, the errors are so BIGG that normal human eyes should be able to see and check on them.)
So what is the penalty for not doing your job?
In Case 1, PlanAssure is to pay Gaelic Inn $317,108 (half of earlier ruling of $775,266) for contributing to the negligence.
In Case 2, Tfwl is to pay JSI $273,386 for being bo-chap to Mr Riggs’ activities.
As in any profession, auditors too have their fair share of problems and risks.