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Authors

Roy A. Chandler

Publication Date

October 1996

Abstract

Just over a century ago, in 1892, L. R. Dicksee in the first edition of his book, Auditing, indicated the lack of agreement among accountants as to the precise nature of their responsibilities for auditing company accounts due in part to the paucity of legal decisions in cases involving auditors. Within a short space of time, the question of auditors' responsibilities appeared to have been answered in two decisions handed down by the Court of Appeal: In re The London and General Bank (Acct. L. R. 1895, 173; henceforth L&G) and In re The Kingston Cotton Mill Co. (Acct. L. R. 1896, 77; henceforth KCM). These two cases were quickly established in the professional literature and case law and today are frequently cited in arguments before the courts, e.g. in Galoo v. Bright Grahame Murray, (WLR 1994, 1360). Although the two Victorian cases share many similarities, they have opposite outcomes: in L&G the auditors were held liable for dividends improperly paid, whereas in KCM, the auditors escaped liability.

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