Question
Megan Gao, an auditor, was engaged by Investocorp Ltd to audit the financial report of Techno Pty Ltd. Investocorp need to know if the financial
Megan Gao, an auditor, was engaged by Investocorp Ltd to audit the financial report of Techno Pty Ltd. Investocorp need to know if the financial report of Techo is reliable for the purpose of deciding whether to purchase a large holding of Techno's shares at the price asked by the estate of one of its shareholders.
Megan did not follow the auditing standards in conducting her audit. As a result, she failed to discover a substantial embezzlement fraud by Techno's financial controller. Investocorp purchased the shares, but it would not have done so had the fraud been discovered.
After discovery of the fraud, Investocorp promptly sold the shares it had purchased in Techno at a loss of $150 000
Explain the extent of Megan's liability to Investocorp
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