BUSINESS LAW 商法论文:课程 RISK CONTROL AND THE LAW [4]
论文作者:51lunwen论文属性:课程作业 Coursework登出时间:2007-07-09编辑:点击率:12959
论文字数:2917论文编号:org200707090930497068语种:英语 English地区:中国价格:$ 33
关键词:BUSINESS LAWRISK CONTROL AND THE LAW
s would rely on, so they should take the reasonable care to investors. In addition, whether there is a reasonable reliance between the auditors and Central Bank is important. Because the firm of auditors were the highly respected accounting firm, it is reasonable the HKEX and investors also highly relied upon the audit report. The audit report was prepared for the HKEX to scrutinize the ENROB's accounts to avoiding any loss of investors [Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 71 ALJR 448]. Furthermore, although the audit report was qualified by a disclaimer that it was prepared solely for the information and use of the HKEX, the disclaimer could not be effective because there is a special relationship existed between the firm of auditors and Central Bank, the firm of auditors owed a duty of care to Central Bank to take reasonable care in providing this audit report [Hedley Byrne Co Ltd v Heller and Partners Ltd (1964) AC 465].
Secondly, the firm of Arthur Ng and Son breached the standard of care because the firm of Arthur Ng and Son has failed to exercise the required standard of care. Under this situation, the firm of Arthur Ng and Son were required to exercise reasonable care avoiding any risk to the investors of firm in exercise of their judgment and in expressing the information or advice which they choose to conveying. And the firm of Arthur Ng and Son was highly respected chartered accounting firm, thus they should be very professional and prudential in exercise their duty to disclose the fact of financial position or accounting practices. However, the detailed report provided in June 2006, but few months later ENROB is founded serious breaches of accounting standards, which may well amount to fraud. It also found a range of corporate governance breaches including lack of independence of the auditors and related party dealings which had not been disclosed. Such problems could not be formed in the few months. And also such serious breaches should have arisen when Arthur and Son audited the accounting practices of ENROB, the financial position of firm would not like what they described. It is clearly that Arthur Ng and Son would not exercise their professional and prudential care. It is true that the firm of auditors should be able to expect investors would rely on their reports when they invest listed companies, but they did not take equal care avoiding related risks for Central Bank or other investors. As a result the firm of auditors Arthur Ng and Son failed to exercise required standard of care to Central Bank.
Thirdly, Central Bank's damages are not remoteness. Due to there is a special relationship between the two parties, the damages of Central Bank should be reasonably foreseen by auditors. The firm of Arthur Ng and Son should take reasonable care avoiding Central Bank's damages, yet they did not equally carry out their duty and so made clear an untrue and unfair audit report to the HKEX and investors. If the audit report was able to truly disclose their serious breaches of accounting standards and lack of independence of the auditors, the HKEX would have taken a further action or Central Bank would have chosen another company to invest. Furthermore, the audit report also provided sufficient confidence on the position of ENROB to the HKEX and Central Bank, because the HKEX decided to take no further action under the audit report, Central Bank believed ENROB provided a true and fair view of t
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