esanda finance coorporation v peat marwick hungerford 1997 :Aussie has more experience than we do in this. This case esanda finance corporate v peat marwick. Peat marcwick is part of kpmg now, turn into kpmg. A finance company and its lending money to a group of companies. One company within the group excel, is offering guarantees for all the loan. One company within the group saying you lend to all these company, we will guarantee we will guarantee. If they dont pay we wil pay. The prob is that the financial position of excel was wrongly stated in auditors statement. So excel couldnt actually pay the guarantee. The event came and debts were called in, excel couldnt pay. What you do in that situation is to look around for someone else to blame. The obvious thing to blame here as well is the auditor said the finial statement were true and accurate but werent. Due to that, we entered into this transaction therefore the auditors ought to be held liable. Quite compelling case. Court said no, the auditors owe a duty to a company as contractually and tort? to current shareholders, this is a mere creditor. If mere creditor then they dont owe you any duties. Court doing here is re fencing the risk that auditor facs. It is is public policy decision route. If we allow that scope of liability to go to wide, then the whole system of auditing fall down as everyone is suing auditors every times when anything goes wrong. These are rare cases, not likely auditors making mistake