Question
Donald Trump the owner of a large manufacturing company, asked Joe Biden, partner in a small audit firm (J&B Ltd), to conduct an audit of
Donald Trump the owner of a large manufacturing company, asked Joe Biden, partner in a small audit firm (J&B Ltd), to conduct an audit of the companys records. Donald told Joe that the audit was to be completed in time to submit an audited financial report to a bank as a apart of a loan application. Joe accepted the engagement immediately and agreed to provide a auditors report within 2 weeks.
Joe hired three accounting students to conduct the audit and spent several hours telling the exactly what to do. Joe told the students not to spend time reviewing the controls or the business environment, but instead to concentrate on proving the mathematical accuracy of the ledger accounts and summarising the data in the accounting records that supported Donalds financial report. The students followed Joes instruction and after three weeks gave Joe the financial report , which did not include footnotes. Joe reviewed the financial reports and prepared an unmodified report indicating that in his opinion the financial report gave true and fair view. The working papers , did not however refer to the use of acceptable accounting policies or compliance with relevant regulations and statutory requirements.
Required:
Explain whether you consider that Joe Biden (J&B) exercised reasonable care and skill and was negligent. Justify your answer with citing relevant case law.
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