Auditors and Legal Liability

Auditors and Legal
Liability
Name of the Student:
Name of the University:
Author’s Note:
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1. Introduction:
• The auditors are deemed to be highly
significant individuals, since they bear the
responsibility to improve the reliability of
the financial statements for all types of
external users (Anantharaman, Pittman
and Wans 2016).
• It is necessary for the auditors to have
the required skills and integrity at the
time of auditing “the operating
statements” of the trading organisations.
• The paperwould evaluate the case of
“Royal Bank of Scotland (RBS) v
Bannerman Johnstone MacLay
(Bannerman) (2002)”

2. Brief description of key events
and factual issues behind the
case:
• “RBS” has professed that they have
bemused over “£13 million” in outstanding
draft aptitudes to the “bankrupt user”, which
is “APC Limited”.
• The main lender or banker of the
organisation was RBS and with the passage
of time, it had exercised options in order to
subscribe for maximum shares of the
organisation.
• APC enjoyed the financial facilities as well
as rebates based on the audit statement of
Bannerman.
• It has been found that the disclaimers
mentioned in the policies might not eliminate
the liability; however, it could eliminate the
scope of assuming the liability to the same
for the courts (Aobdia and Shroff 2017).

3. Responsible parties of the case and
evaluation of the appropriateness of
damages or penalties imposed:
• According to RBS, the auditors needed to
owe a duty of care, which was violated at
the time of negligent auditing of accounts
and as a result, the bank encountered
significant loss.
• In contrast to the debates laid down by
the “actuaries”, the bank was not needed
to reveal that the “accountants” wanted
the bank for relying on the “reports” for a
specific reason, it was adequate that the
“clerks” was probable to conduct the same.
• Therefore, the forum pursued a clean
authority “guideline” regrading the
requirement of no such goal. Hence, the
culpable parties in this case were the
auditors of RBS.