Audit negligence and financial reporting disputes

If there are misstatements in audited accounts because of auditor negligence, our specialist forensic services team can help. We have an in-depth understanding of the onerous requirements of auditing standards, and extensive experience assessing the extent to which auditor negligence contributes to misstatements in audited accounts.

Working closely with your legal team, we will work constructively to determine the extent of negligence and how that negligence gave rise to the underlying losses.

Our team has worked on numerous cases where financial reporting matters are at the heart of the dispute, covering international financial reporting standards and FRS 102.

We aim throughout to ensure our input and reports are balanced and understandable to non-accountants.

• We act as an expert witness in relation to audit negligence and financial reporting dispute claims and regulatory breaches

• Our team provides audit and financial reporting expertise, supporting a wide range of disputes between businesses, including between businesses and their former auditors

• We have strong experience as an expert witness acting for both claimants and defendants. This includes both criminal and civil procedures, as well as supporting regulators in their examinations of audit work as part of regulatory investigations and advising accountancy firms under investigation

We commit to close personal involvement with each assignment. This helps ensure that our expert witness has a high level of personal knowledge of the assignment’s specific issues and enables us to provide first-hand insights. Our expert witnesses have personal experience of appearing in the witness box, as well as attending and contributing to mediations.

Our forensic accountants and audit experts can support you when you are subject to regulatory or disciplinary action (by FRC, ICAEW and others) or civil claims (by an audit client).

Example cases

We have acted as experts in a wide range of cases:

• In a claim involving the large audit firm of a group whose financial statements were alleged to have been materially and fraudulently misstated for many years

• In a claim involving a large audit firm, where an airline group was alleged to have published misstated financial statements in various countries

• In a claim against an audit firm involving a financial services company where the financial statements were misrepresented due to fraudulently portraying assets as being owned by the company

• For the defence in a claim against a firm of auditors where it was alleged that the financial statements misrepresented the assets of the company

• For the claimant against a small firm of auditors where it was alleged that the capitalisation and income recognition policies were inappropriate for the business and led to board decisions damaging to the long-term future of the company

• In a case where it was alleged that the auditor of a large Irish bank failed to identify significant unauthorised related-party transactions that, had they been appropriately reflected in the financial statements, would have led to board intervention and avoided losses

Our team can assist you in determining whether a misstatement has arisen in your financial statements and if they meet the requirements of the applicable financial reporting standards (IFRS or UK GAAP). We can help determine what correction, if any, is needed.

Example cases

We have acted as experts:

• In the defence of a finance director of a financial services sector group, where it was alleged that financial statements were misstated

• In a claim involving a multinational group’s financial statements that failed to disclose material related to third-party transactions that were not at arm’s length

• In a claim relating to misrepresented financial statements drawn up using a going-concern assumption when that assumption was not valid

• In a case involving a national corporate that applied hedge accounting in circumstances where it was not eligible to do so

• In a case where material liabilities were omitted from the financial statements

• In a criminal prosecution in which it was alleged that a large retail outfit’s managing director deliberately misrepresented the financial statements

• In a claim against a subsidiary finance team, which was alleged to have misled the parent over the business’s true state of affairs within the

• In a dispute with HMRC over the extent to which tax relief was claimed for investments in a collection of films

• In a dispute with HMRC over the tax deductibility of certain expenses, including amortisation of goodwill