Certification of misleading accounts and auditors’ liability

The matter

Several companies placed in compulsory liquidation, belonging to a group engaged in materials handling and international transport, had for several financial years presented accounts certified without qualification. Those accounts, although irregular, untrue and misleading, had failed to disclose the concealment and the fraudulent accounting manipulation attributable to the salaried chief executive. The position raised squarely the question of the role of the statutory auditors and of their failings in discharging their certification duties. We were instructed by the court-appointed liquidator to pursue their liability.