The Accounting Firm Hatchet And Co

Duty of Care: best interest; defensible decision making; contextualising behaviour; identification of positive and negative risks

Duty of care is a requirement to exercise reasonable care, attention and caution to avoid negligence which would lead to the harm of other people.

2.2 Describe how to manage risks associated with conflicts or dilemmas between an individual’s rights and duty of care

There are two common factors that must exist before the law says a duty of care exists, which are

A duty of care is a legal obligation imposed on an individual requiring that they adhere to a standard of reasonable care while performing any acts that could foreseeable harm others. A definition from Wikipedia

From considering all of the facts of Giant Plc. Vs. Hatchet & Co, it is evident that we are faced with the problem of negligent misstatement. It could be argued that this case could be somewhat in relation to tort of deceit. However, this only applies when someone intentionally lies when making a statement, and from looking at the facts of this case there is no evidence of this so the problem has to be based on negligent misstatement. The underlying problem of this case is that the audit accounts made by the defendants for the Giant Plc were not accurate, which resulted in the share value of the company to fall drastically and shareholders losing their investments. Thus Hatchet & Co are faced with defending themselves in a case of negligent misstatement. Both Giant Plc and its shareholders, the claimants for this particular case, faced economic loss and want the necessary damages to counteract this.

The Tort of Negligence put the claimant in the position to prove that the defendant owed to them a duty of care, the defendant breached that duty and the claimant must have suffered damages as result of that breach (Donoghue v Stevenson [1932] AC562).

In certain situations, a duty of care is owed to another person. For example, a surgeon owes a duty of care to whoever they operate on. The existence of a duty of care is established by the Neighbour Test which was brought in by Lord Aitken after the Donoghue v Stevenson case;

It is essential to manage risks associated with conflicts or dilemmas between an individual’s rights and duty of care by finding a level of balance. It is important that the care giver put personal feelings aside and look objectively at the situation. The right action should always be taken even if emotionally this is hard to do.

The three directors were charged with charges of deceiving auditors and dishonesty. Wilkie was charged with two offences of dishonesty as a company’s officer and misleading an auditor of the company, Mainprize was also charged with the same three offences and Burroughs was charged with a misleading a company’s auditor offence. The three directors made the auditors and the investors of the company believe that it was adequately reserved. In other words, they made these auditors and investors believe the company had attained an $8.6 million profit whereas it had actually incurred a $ 19.1 million loss.

Establishing whether not the current case is analogous to cases in which a duty of care already been determine. For instance the category of which duty of care has been held not to exist. The law justifies all these through the word responsibility. Everyone has a responsibility for their actions. This same word, responsibility, is also used to justify strict and vicarious liability. Parents, guardians, employers and other similar persons are responsible for their wards and employees. I think this is also a balancing of the scale. Due to circumstances such as incapacity in law of inability to pay, the injured party may be

“In the majority of cases that come before the courts, whether the defendant owes the plaintiff a duty of care can be determined from precedent created by earlier cases; for example manufacturers of goods owe a duty of care to consumers, motorist owe a duty of care to other road users, boat captains owe a duty of care to their passengers, teacher owe a duty of care to their students, occupier owe a duty of care to persons who come on to their property. . (Andy Gibson, Douglas Fraser, Business Law 5th edition, Pearson 2011 page No.165, 166 and 169).”

Corporate Finance AIG Accounting Scandal Explained December 8th, 2012 ________________________________________________________________________________ On February 9th, 2006, the SEC and the Justice Department settled with AIG for an amount in excess of $1.6B related to alleged improper accounting, bid rigging (defined by Investopedia as a scheme in which businesses collude so that a competing business can secure a contract for goods or services at a pre-determined price), and practices involving workers compensation funds. Both the CEO and CFO of AIG were replaced amidst the scandal. This closure ended a 5-year period, beginning in 2001, which tarnished the 80-year old institution’s reputation that had become the world’s largest

The distinct separation that involves the owners an s well as the shareholders of accompanies and the limited company itself is what is considered as the ‘corporate veil ' or the ‘veil of incorporation ' (Walston-Dunham 2009). In this connection, the paper brings the reality that the UK courts should pierce or lift the corporate veil to a considerable and greater extent in order to hold erring those directors or shareholders of a company liable and accountable for the

The culture at Satyam, especially dominated by the board, represented an unethical culture. Satyam was brought to its knee due to tunneling‘effect unlike Enron, which sank due to agency ‘problem. All kind of frauds have proven that there is a need for good conduct based on strong ethics. The debacle of Satyam raised a debate about the role of CEO in driving an organization to the heights of success and its relationship with the board members and ore committees. The fraud at Satyam brought to the light the role of CG in influencing the protocols related to the working of audit committee and duties of board members (Niazi, and Ali, 2015). The government of India took very quick actions to protect the interest of the investors of Satyam, the nation’s image across the world and, safeguard the credibility of India. Moreover, Satyam fraud has forced the government to re‐write the CG rules and tightened the norms for auditors and accountants (Bhasin, 2013b). The Indian affiliate of PwC ―routinely failed to follow the most basic audit procedures. The SEC and the PCAOB fined the affiliate, PwC India, $7.5 million in what was described as the largest American penalty ever against a foreign accounting firm (Norris, 2011). According to Mr. Chopra, President (ICAI), ―The Satyam fraud was not an auditing or accounting failure, but one of CG. This apex body had found the two PwC auditors prima-facie‘guilty of professional misconduct. The CBI, which investigated the Satyam fraud case, also charged the two auditors with complicity in the commission of the fraud by consciously overlooking the accounting irregularities. The Satyam fraud, finally, had to end and the implications were having far reaching consequences. With all the 10-people involved in the multi-crore accounting fraud found guilty of