Azwinah Binti Azmi

69201
G01
Answer Discussion Question 2

Under the common law, the auditors of Syarikat Perkilangan Maju Berhad are
accountable for carelessness and lead to damage. In order to establish the problem in the action
relating to the auditors' carelessness, the plaintiff must prove four components which are the
plaintiff was owed a duty of care from the auditors, the duty of care was breached by
the auditors, plaintiff suffered a financial loss and causal relationship exists between
the breach and the financial loss of the plaintiff. In this case, the plaintiff known as
Boom Boom Bank is a third-party user in Syarikat Perkilangan Maju Berhad. It same
with case which are Caparo Industries Pty v Dickman & Others, in 1984, relying on the
audited account, Caparo purchased Fidelity plc shares in the open market on staged
basis until finally acquired control of the Fidelity. The audited accounts of Fidelity
showed a profit of £1.2m. After taking over, Caparo discovered that the result would
have been a loss of £400,000. Caparo alleged that the auditor had been negligent in
auditing the account. As a result, third-party loans have no duty in terms of custody.
While investment-related facts are made on the soundness of the interim accounts
examined, there is no duty of care based on proximity. As a result, auditors might
defend themselves by stating that they would conduct their reviews following the
auditor's professional standards. Due to the nature of the task, the auditor can only
provide limited assurance in the context of a review assignment.