Title： Investigation on audit negligence claims
This essay discussed the issue of claims in negligence about audits in the area of policy, case law, and the difference of current law and the general principles of negligence. At last, the author stands by the side of the current law.
The attitude of the court to the auditors is that the court becomes increasingly noticeable about the pressure faced by the auditors and wants to take action that to prevent the auditors from being scared and dare not to provide audit services. It seems that the above concern is not consistent with current policy because current policy emphasizes the importance of market self-regulation under the minimum amount of government regulation. Furthermore, every year after the completion of all the audit projects, there would be a program designed by the Australian National Audit Department named with ‘Client Survey’ for collecting the feedback of the people that were audited, these information were obtained through the investigation or interviews on the people being audited, while the auditors are not in charge of this feedback information collection program. After the implementation of this project, the degree of satisfaction of people being investigated increased from 70% in 2008 to 86% in 2012, so the claims made by the creditors and shareholders may also improve the level of audit, as a result, the court should never do not accept their claim proposal just due to their worry.1
In the year 2001, Magistrates Court of South Australia accepted the case New Future Funding company V Charles Tax & Advisory firm  AC 2794.2 New Future Funding company was the major shareholder of Walter Solar Energy, however, the company went into bankruptcy due to bad management, after the audit of Charles tax & advisory firm on Walter Solar Energy, New Future Funding company felt that their audit was unjust to them, so they made the claim to Magistrates Court of South Australia and their claim was accepted. Finally, Magistrates Court of South Australia judged that the audit of Charles tax & advisory firm on Walter Solar Energy is fair-minded and the New Future Funding company lost the fair. In the year 2005, Coroner's Court accepted the case Southern Venture V TWC company  AC 2985.3 Southern Venture company asserted that their interests were badly damaged by the aduit of TWC company on the closing down of Willey Utilities company. Holding 21% of the shares of Willey Utilities company, Southern Venture company asserted that TWC company did not consider their interests fully in their accounting section. According to the regulation that the organizations which think that the audits relevant to themselves are not fair enough could apply for another audit conducted by another audit firm after the confirmation of supervisory organization, the Coroner's Court sentenced that Southern Venture could choose to find another audit firm for holding another audit.3 In the year 2006, the Brisbane court accepted the case Jim Carter Construction group v Komer Tax company  AC 3071,4 and Jim Carter Construction group asserted that Komer Tax company did not notify them in time on a series of issues in the audit of the bankruptcy of Crispor Building Materials firm which they held 13% of the shares. According to the regulation in the Corporation Law that the in the bankruptcy process, the companies that are related to the company which went bankruptcy should positively notice the related processes and activities that they need to care about. Then after referring to the records made by Komer Tax company in the audit of the bankruptcy of Crispor Building Materials firm, the Brisbane court judged that the audit of Komer Tax company was completely consistent with relevant laws that they should take no responsibility and Jim Carter Construction group lost the case.4
In the current law, the negligence of auditors is treated much more serious than the the general principles confirmed in the 1932 case. Firstly, the neglience of auditors are becoming much more important than its counterpart eight years ago because of the prosperity of globalization, which made Austrilia closely internal connected with other countries, so in order to attracting funding, science, technology and genius from other countries, Australia must make the auditing process extremely transparent and just to keep its competition edge on the global market. Secondly, the involvement of consumers are much more emphsized for the aim of lessening the negligence of auditors, and the reason behind this is the fast development of science and technology, which enables consumers to get involved with the audit process or the investigation after the audit with great ease. And in the consumer-oriented era, the extensive involvement of consumers in the audit process is imperative for the healthy development of business.5
Yes, I agree with the current law. The current laws is consistent with the development of market and society and is much more strict on the supervision of the audit. The audit process is a significant component in modern business and could play a great role in the competion of the whole economics, and under current law, the negligence of auditors could be lessened greatly because the auditors need to not only obey much more complicated and formal procedures that their chances of making negligences would be greatly reduced.6 In brief, such strict modern law would aid Austrilia in competition with other countries especially in attracting elites in all kinds of industries by making sure the high quality of audit.
In this essay, the issue of claims in negligence about audits in the area of policy, case law, and the difference of current law and the general principles of negligence was discussed. In addition, the author showed positive attitude towards current law.
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