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Bank Report of Audit Purposes. - Printable Version +- Accountancy Forum (https://www.accountancy.com.pk/forum) +-- Forum: The Profession (https://www.accountancy.com.pk/forum/forum-the-profession) +--- Forum: Accounting and Audit (https://www.accountancy.com.pk/forum/forum-accounting-and-audit) +--- Thread: Bank Report of Audit Purposes. (/thread-bank-report-of-audit-purposes) |
Bank Report of Audit Purposes. - smraza - 08-03-2004 Dear all, I would like ask that, when the banker of a company sends bank report for audit purposes directly to its auditors, Can he write the following statement "This certificate is being issued upon specific request of our customer without any risk, responsiblity, liability or guarantee onpart of the bank or any of its employees." ???????????????????????? SMR - Masood - 08-03-2004 Of course the bank can make the statement. Remember, the bank has not contractual obligations towards the auditors. They act only on behalf of and at the direction of their customer/clients. - Goodman - 08-04-2004 <pre id=code><font face=courier size=2 id=code> "This certificate is being issued upon specific request of our customer without any risk, responsiblity, liability or guarantee onpart of the bank or any of its employees."</font id=code></pre id=code> 1 Does all the banks use this statement? 2 Depends what are the discloures in the audit letter. I mean if bank say client has one bank account and later transpires that it had another one. Or bank failed to disclose the personal gurantees for the directors son mortgage and as such financail statements did not have all the disclosures and public was misled, I think the PI insurers of the auditors and the bank are up for a costly battle. So basically, bank can write whatever they like but if they are negligent they are negligent. see the BJM VS Bank of Scotland its a landmark case in the modern auditing. - Goodman - 08-04-2004 sorry forgot to include the disclaimer. above infomation is my understanding only and it doesnot have any value other thhan that. please make your own judgements. - Masood - 08-04-2004 Dear Goodman, The question was whether the bank can make disclaimers. The decision you quote BJM v BoS was actually <i>against </i> the auditors and not against the Bank. The basis of the action brought by Royal Bank of Scotland Plc (the âBankâ) was that the Bank had lent âsubstantial sumsâ to a company (the "Companyâ) of which the firm of accountants, Bannerman Johnstone Maclay (âBJMâ), had been the auditors. When Receivers were subsequently appointed for the Company and the Bank was unable to recover much of the monies lent, the Bank argued that BJM as auditors had owed a duty of care to the Bank, and that the losses it had sustained had been attributable to the breach of that duty (having relied, at least in part, on the contents of the audited accounts when making the commercial decision to advance the relevant loan(s)). - Goodman - 08-05-2004 Auditors make disclaimers to third party in the audit report by specifically mentioning that the audit report is for shareholders, still we get sued, so caparo's principle is now rewritten. The point mentioning BJM case was if auditors could be held negligent by court instead of a health warning that report is for shareholders only and no duty of care is owed to anybody else by anybody else why not the opposite could happen in case bank is negligent reporing to us. All the bank reports have the disclaimer these days, but it doesnot have any value, I think. They can write whatever they feel like. - smraza - 08-06-2004 No zubair, All banks are not writing these kind of statements, I have seen only one bank, and the interesting thing is that, i have got the confirmations of same bank from two different branches, one branch is writing that statement, but the other is not, In my opinion, there is no impact on liability of the bank by writing such a general statement, the bank charges an amount for providing such information to the auditors, hence, the information is not volantary and if bank makes any misstatement then it will be held liable, bcaz auditor may qualify his opinion on basis of information provided by the bank. I have seen many cases in which bank confirmed the qualification matters to the auditors, (afterwards bank issued revised i.e. correct confirmations). SMR - Pracs - 08-28-2004 Yeah all banks here put the disclaimer statement too, and do issue revised statements if an error is pointed out. I am not sure about the legal implications here. |