You are the partner in charge of the audit division in your accountancy firm AAA Accountants. In August 2022 you were engaged by Oz Rock Constructions Ltd (ORC) to provide an audit report to be used solely for the purposes of loan negotiation with Community Bank of Australia Ltd (CBoA). Whilst auditing ORCs company records of its shareholdings you noticed shares held by a Mrs Han. The address of that shareholder is the same address of the Senior Partner in your accountancy firm and Mrs Han is the wife of that Senior Partner. CBoA reviewed the audited financial statements and refused to lend further funds to ORC. ORC then went to Fast Cash Pty Ltd (Fast Cash) and obtained a $10 million loan from Fast Cash. Six months later ORC went into receivership and defaulted on its loan. Fast Cash discovered ORCs inventory accounts were significantly overstated. Fast Cash have commenced legal action against your firm which you are seeking to defend.

Discuss whether AAA Accountants can defend the legal action by Fast Cash. In your brief to your lawyers advise of what actions you took and all necessary steps to ensure there was compliance with the Corporations Act 2001 (Cth) and the general law. Make assumptions of fact where necessary. What would be your strongest defence against Fast Cash? Follow the HIRAC method of legal problem solving.