Audit, Assurance and Compliance

Running head: AUDIT, ASSURANCE AND COMPLIANCE
Audit, Assurance and Compliance
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1AUDIT, ASSURANCE AND COMPLIANCE
Executive Summary
The unethical conduct of the auditors has been causing damage towards the reputation of
this profession and the cost of the profession. On the other hand it has been causing a
considerable amount of competition within the market with respect to the auditors. The
quality of the audit information has also been put to question under these circumstances and it
has been created concerns among the general public with respect to the audit information that
has been availed by them. The case of the Royal Bank of Scotland plc v Bannerman
Johnstone Maclay (a Firm) and Others OHCS 23 Jul 2002 has been an example of such a
contention where the auditors has been imposed with a huge amount of penalty as well as
caused a reputational and quality injury in relation to the profession. This can be avoided by
way of the adoption of a proper audit strategy, audit planning and other effective measures.
The proper designing and implementing of these assist profession to prevent the further
recurrence of such liability which might end up in litigation.

2AUDIT, ASSURANCE AND COMPLIANCE
Table of Contents
Introduction................................................................................................................................3
Main Body..................................................................................................................................4
Conclusion................................................................................................................................10
Reference..................................................................................................................................11

3AUDIT, ASSURANCE AND COMPLIANCE
Introduction
The auditing profession has been subjected to a considerable amount of reputational as
well as efficiency concerns, which imposes the liability upon the auditors with respect to the
maintenance of the reputation of the profession as well as the assurance with respect to the
quality of the financial services. This does not only imply a damage to the reputation, it also
imposes a hefty amount of costs upon the profession. It also creates a competitive
environment within the audit market (Byrnes et al. 2018). The case of the Royal Bank of
Scotland plc v Bannerman Johnstone Maclay (a Firm) and Others OHCS 23 Jul 2002 has
been an example of such a contention where the auditors has been imposed with a huge
amount of penalty as well as caused a reputational and quality injury in relation to the
profession. In the instant case, the defenders where a chartered accountant firm. They have
been entrusted with the task of the preparation of the accounts of the customer belonging to
the pursuer bank. The bank has brought a claim against the firm, for negligent misstatement
with respect to the accounts of the firm. They also brought a claim for damages against the
firm as they have based their decision to extend a loan towards the customer based on the
accounts provided by the firm. In this furtherance, it has been held by the court that the firm
have been aware of the fact that the accounts that has been provided by them will be chiefly
based upon for the purpose of deciding upon the lending process.
This paper will strive to present a discussion upon the key events and the factual issues
behind the case. It will present an explanation upon the culpability for which parties were
deemed responsible as well as the reasons behind the same and also the damages imposed or
the penalties and consider whether they were appropriate. This paper will also investigate and
explain the relevant issues in Auditing and Accounting raised by the case. It will also strive to
discuss the causation of the issue and will consider market pressure, organisational culture,