John Selwood's audit clinic
This month, John takes some interesting questions from delegates on the spring Audit & Assurance Faculty roadshows. Topics include dealing with litigious firms and how the audit industry can avoid criticism in the current environment.
I am finalising an audit for a company in the financial services sector. There are a number of misselling claims against them that should be disclosed in their financial statements. I have taken the liberty of drafting some suggested wording for contingent liability disclosure but the company’s lawyers are saying that there must be no disclosure whatsoever on the topic. In fact, the lawyers have threatened to sue my firm if it is included. Help!
It is hard to know where to start with this. It’s interesting that you do not mention the company’s management at all because this is mostly their issue to deal with. When you drafted the disclosure for the client you might have been overstepping your responsibilities as that is management’s job.