The split decision handed down recently by the Supreme Court of Canada (Deloitte & Touche v. Livent Inc. (Receiver of) ) held the accounting house- albeit conditionally- responsible to extend a duty of care to clients.
By negligently conducting the audit, and impairing Livent’s shareholders’ ability to oversee management, Deloitte exposed Livent to reasonably foreseeable risks, including losses that would have been avoided with a proper audit…. Deloitte owed Livent a duty of care, which it breached.
The landmark ruling which started in 1998 will now exert a focus on accounting firms everywhere to be held liability for negligence.
The decision brings into sharp focus the ‘free pass’ accounting firms in Barbados and the region have been given in the CL Financial and CLICO debacle as one glaring example. Clearly the confidence of the public in financial institutions is significantly stoked by the work oversight agencies are expected to deliver. They should represent a solid line of defense and have a fiduciary responsibility to protect the interest of the public. It s amazing given the revelations coming out of the Colman Commission of Enquiry in Trinidad and Deloitte Forensic Report into local operations of CLICO not a single management letter issued by the accounting firm of CLICO noted any serious breach in the financial affairs that we are aware.
Who will bell the cat?
Related link: – Supreme Court says Livent auditors liable but sets conditions