Fisch & Schipp are the auditors to AHM Publishing Co. Ltd, publishers of textbooks. They carried out the audit for the year ended 31 December 202X and signed an unqualified audit report. Shortly after the AGM, which was on 23 June 202Y, negotiations began for the sale of the company to Amalgamated Publishers plc who acquired the company in November 202Y.
The audit of AHM's accounts for the year ended 31 December 202Y by Puce Watermelon in March 202Z revealed that a printing bill for two of AHM's bestselling titles dated 30.11.202X had been disputed and thus not entered in the books. The matter was resolved in August 202Y when AHM paid the £288,000 owing. The bill had not been accrued in the 202X accounts.
Amalgamated Publishers plc paid £1m for AHM whose reported profits net of management remuneration were: 202V £216,000, 202W £213,000, 202X £217,000. Amalgamated sued Fisch & Schipp for damages.

Discussion
– Discuss in detail all the issues raised by this case.
– How might Fisch & Schipp defend themselves against this action?