Audit negligence and financial reporting dispute

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 of assessing the extent to which auditor negligence contributes to misstatements in audited accounts.

Working closely with your legal team, we will work constructively to find appropriate answers to 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.

Our aim throughout is to ensure that 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 different 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 examination of audit work as part of regulatory investigations and advising accountancy firms under investigation

Our approach is to ensure that we have close personal involvement with each assignment. This helps to ensure that our expert witness has a high level of personal knowledge of the issues relating to the specific assignment and enables us to provide first-hand insights. Our expert witness has 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 (FRC, ICAEW, and others), or civil claims (from an audit client).

Example cases

• Acting as experts in a claim involving a large audit firm, which was auditor to a group where the financial statements were alleged to have been materially and fraudulently misstated for many years
• Acting as an expert in a claim involving a large audit firm, where an airline group was alleged to have published misstated financial statements in various countries
• Acting as an expert 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
• Acting as an expert for the defence in connection with a claim against a firm of auditors in which it was alleged that the financial statements misrepresented the assets of the company
• Acting as an expert for the claimant in connection with a claim against a small firm of auditors where it was alleged that the capitalisation and income recognition policies were inappropriate for the business. This led to board decisions that were damaging to the long-term future of the company
• Acting as an expert in relation to a large Irish bank where it was alleged that the auditor failed to identify significant unauthorised related-party transactions, which (had they been appropriately reflected in the financial statements) would have led to intervention by the board 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 financial reporting standards that apply (IFRS, UK GAAP). We can also assist in determining what correction, if any, is needed.

Example cases

• Acting as expert in the defence of a finance director of a group operating in the financial services sector where it was alleged financial statements were misstated
• Acting as an expert in a claim involving financial statements for a multinational group that failed to disclose material related to party transactions which were not at arm’s length
• Acting as an expert in a claim relating to misrepresented financial statements which were drawn up using a going-concern assumption when that assumption was not valid
• Acting as an expert in a case involving a national corporate that applied hedge accounting in circumstances where it was not eligible to do so
• Acting as an expert in a case where material liabilities were omitted from the financial statements
• Acting as an expert in a criminal prosecution in which it was alleged that the managing director of a large retail outfit deliberately misrepresented the financial statements
• Acting as an expert in a claim against a subsidiary finance team which was alleged to have misled the parent over the true state of affairs within the business
• Acting as an expert in a dispute with HMRC over the extent to which tax relief was claimed for investments in a collection of films
• Acting as an expert in a dispute with HMRC over the tax deductibility of certain expenses, including amortisation of goodwill