Auditors Liability

[zubair]

The world has seen a dramatic growth in the number of negligence cases being brought against the auditors of the failed companies. Is there any history of such a case being brought against one of the auditors in Pakistan.
If there was no such case, does it mean that there were no business failures in Pakistan or the Audit profession is airtight? or we just dont know the modern dimensions of changing world.





Edited by - zubair on Aug 16 2003 040949 AM

[smraza]

following is the link in which u can see the year wise decisions taken against the auditors, (no matter 95% are the auditors which are from small firms, as somebody mentioned in any ohter forum that big firms have big teeth so SECP will not take panga with them <img src=icon_smile_big.gif border=0 align=middle>)

http//www.secp.gov.pk/otherorders.htm

S M R

[Pervez]

Hi fellows!
Raza, i think u did not get the question right! What zubair is asking is the litigation brought by the investors in the failed co rather than by SECP(don't get obsessed with these four letters).
Zubair, i think the answer lies in the state of our judicial system and lack of awareness by investors of their rights.
Our judicial system is corrupt, slow, and ineffective in the end. That is why people like to avoid courts and kacharies.
If it was quick, fair, and accessable to ordinary citizens, you would have seen a lot more actions on this front.
I don't know why Raza thinks that big CA firms are beyond the law (that no body would take panga with them). I think it is a mistaken belief. SECP is ready to scarifice some of these big goats at the alter of forgein investors. I believe there will be some actions against the big fishes to show that SECP has teeth.
Anybody willing to bet something on it?



Edited by - Pervez on Sep 01 2003 074231 AM

Edited by - Pervez on Sep 01 2003 075929 AM

[irfanahmedmeer]

The main problem is overall lack of trust in judicial system not only for corporate matters but otherwise. This lack of trust is justified. Both investers and the management and the auditors clearly know that nothing can be gained from going into court or whatever gain may be is so far and un certain that going after does not make good bussiness sense. So there it is I think thats why no litigation has been brought against auditors in Pakistan

[irfanahmedmeer]

The main problem is overall lack of trust in judicial system not only for corporate matters but otherwise. This lack of trust is justified. Both investers and the management and the auditors clearly know that nothing can be gained from going into court or whatever gain may be is so far and un certain that going after does not make good bussiness sense. So there it is I think thats why no litigation has been brought against auditors in Pakistan

[zubair]

Just a Note
Thanks Pervez for saving me time to clear my viewpoint in your message to SMRAZA. You have accurately ascertained the thurst of the topic.

My understading of the legislation is that SECP is a statutory body in a supervisory role. IT IS NOT A QUALITY CONTROL body. However, ICAP in Pakistan and ICEAW in UK is responsible for quality control. ICEAW has list of cases every month... but ICAP no desciplining of members,,why?

Views about lack of trust on judiciary are justified. I agree, but I still believe that there are loads of legal firms willing to persue negligence claims on no win no fees basis.