Ready and Co, a firm of accountants and auditors, were engaged to prepare the ac

Question

Ready and Co, a firm of accountants and auditors, were engaged to prepare the accounts and balance sheet for Products for People plc, knowing the accounts were to be sent to Hind, a private investor, who was thinking of were negligently prepared and showed the company as financially stable, even though the opposite was true and the company had large unpaid debts. Hind showed the accounts to her friend Imran. Hind bought AEDI million worth of shares and Imran bought AED 500,000 woth of shares. Within 6 months, Products for People plc went into liquidation and both Hind and Imran lost their investments buying shares in Pr oducts for People plc. The accounts Advise (1) Hind, and (2) Imran whether they are likely to be successful in their caims in negligenceagainst Ready and Co andwhat defences the company may have What are the 3 points to be proved in any claim based on negligence? .What does pure economic loss mean and when can a claim be made for it? . What must be proved in a claim for 'negligent misstatement? .Would Hind be successful in a claim for negligent misstatement against Ready and Co? . Wouid Imran be successfui indlain for negligent misstatement again . Would Ready and

Explanation / Answer

The auditors are responsible for presenting true and fair view of the accounting statements which are meant to be public documents based on which the viewers of the financial statements take true and fair view. However , in the current scenerio the auditors did not present a true and fair view becasue of which the two people Hind and Imran bought the shares of the company and can claim suit against the company for negligence.

1. Claim of negligence can be proved on the basis of the companys responsibilty to present true and fair view, lack of transperancy and misrepresentation from the company,.

2. Economic loss means  financial loss and damage suffered by a person such as can be seen only on a balance sheet rather than as physical injury to the person or destruction of property.

3. It is the company responsibilty for true and fair view representation, an intential purpose to defeat this would mean fraud .

4. Yes

5. No

Related Questions

Navigate

• Browse (All)
• Browse R
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.