Audit Assurance and Compliance

AUDIT ASSURANCE AND
COMPLIANCE

EXECUTIVE SUMMARY
This report is on the topic audit assurance and the compliance which involves the case of
Cam & Bear Pty Ltd v McGoldrick [2018] NSWCA 110 which is in respect to the breach of duty
by the auditor. The case is related to how Mr Bear suffered loss due to the wrong terms entered
in the financial statements which were audited and qualified opinion was given on the same. The
breach of auditor's to give record and inform users in audit reports of the terms that are of
material importance It is the duty of the auditor to timely and accurately prepare the audit report
and form opinion on it, make relevant inquiries and comply with the accounting standards and
report fraud and other non-compliance. Based on the findings to the case, it is stated that the
auditor require to be aware of the facts and contents stated in the financial statements and is held
liable in the case with 90% fault. It is the duty of auditor to perform the audit with due care and
diligence and report all the matters that have the ability of influencing decision of users of
financial statements.

TABLE OF CONTENTS
EXECUTIVE SUMMARY.............................................................................................................2
1. INTRODUCTION ......................................................................................................................1
2. Description of key events and factual issues...............................................................................1
3.Responsible parties. .....................................................................................................................2
4. Investigation and explanation .....................................................................................................2
5. Root cause of Issue......................................................................................................................3
6. Problems, mistakes or misrepresentations ..................................................................................4
7. Recommendations .......................................................................................................................6
1 Audit Strategy...........................................................................................................................6
2 Audit Program ..........................................................................................................................6
3 Other effective measures ..........................................................................................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

1. INTRODUCTION
Auditing standards prescribes both essential principles and procedures governing audit
process and professional conduct of the auditor. Standards carry force of laws undertaking the
audit under Corporations Act 2001. Auditing Standards of Australia requires auditor to make
several enquiries related to liabilities. Auditors are required to enquire about the material matters
and to consider possible impact over assets, revenues and the expenses. The present report will
discuss the case of Cam & Bear Pty Ltd v McGoldrick [2018] NSWCA 110. The case is related to
breach of duty by auditor. Paradox for the auditors is that for performing the duties with requisite
care and skills of professionals required by the auditing standards, they have to collect
appropriate and sufficient audit evidence for forming their opinion. Report will provide about the
breach of duties by auditors and the consequences leading to legal actions. It will provide about
the duties and responsibilities of the auditors while performing the audit.
2. Description of key events and factual issues
On May 23rd , 2018 NSW Court of Appeal in the case of Cam & Bear Pty Ltd
McGoldrick unanimously overturned decision of trial judge that breach of duty did not caused
loss claimed by Bear. Key issues in the case were to determine scope of duty of auditors and
whether the loss claimed was due to breach of the duty by the auditor.
Key events
Dr Bear who was director of corporate trustee of the self management superannuations
fund and also the beneficiary in the same. In year 1990, Bear engaged one of the friends named
Lewis for managing the Fund. Lewis was owning various companies in which investments were
made by the Fund. Bear understood that assets held by Fund consisted of the cash and shares.
Most importantly, Bear thought that the monetary contributions were being made in the cash for
investment in secured product. The annual tax returns of the Fund were completed by accountant
and were audited by McGoldrick. There were not interaction or conversation between Bear and
Goldrick regarding the accounts of Firm. Auditor had only dealt with the Lewis. There was no
such communication that Lewis has used contributions of Bear as unsecured loans.
Financial reports recorded contributions of Bear as cash contributions while the money
was used actually for the unsecured loans. In 2008, when Bear sought to withdraw the
contribution in cash from Fund for establishing new practice, was prevented from doing the
same, as contributions made by Bear had already been used for the unsecured loans. Lewis
1