Académique Documents
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Identification of Issues
1.1 professional negligence it happened when the auditor of Deloitte & Touche withdraw
prematurely from the auditing engagement but this suit of MedTrans was reversed because it was
concluded that the trial court prejudicially erred in giving an incorrect jury instruction on the
standard governing defendants' resignation from their professional engagement with Medtrans
1.2 breach of contract - breaching the parties' engagement contract by not issuing an audit
opinion to MedTrans but this was also reversed because it was concluded that the record was devoid
of substantial evidence that defendants caused Medtrans's alleged damages for breach of contract
1.3 negligent interference with prospective economic advantage - negligently interfering with
Medtrans's prospective economic advantages with successor auditors and a potential investor by
making defamatory statements impugning the honesty of Medtrans's management but this was also
reversed because it was concluded that the jury instruction on negligent interference with economic
advantage omitted the tort's "independent wrong" material element
2.2 On Medtrans's claim for negligent interference with prospective economic advantage
against the auditors, the jury by special verdict found: Medtrans had economic relationships with
third parties Blair, Ernst & Young, and Peat Marwick containing probable future economic benefit or
advantage to Medtrans; at least one auditor knew of the existence of those relationships; at least
one auditor negligently engaged in acts or conduct while aware or constructively aware that those
acts or conduct would interfere with or disrupt those relationships; those relationships were actually
interfered with or disrupted; Medtrans suffered damages caused by acts of the auditors designed to
interfere with or disrupt those relationships; and Medtrans was not contributorily negligent with
regard to its claim. fn. 7
Cons:
Maybe it will be more costly for the firm;
Maybe there will be more disagreements between the firm and MedTrans.
Pros:
Auditors will be careful with their work.
Cons:
Persons responsible for fraud will be embarrassed.
Being honest depends on the attitude of a person.
Submitted to:
Submitted by:
Escobia, Marjocris
Submitted to:
Submitted by:
Escobia, Marjocris