ddddd.doc - a What relationship did Deloitte have to Livent Livent had appointed Deloitte as its auditor for the services from 1997 to 1998 Deloitte

ddddd.doc - a What relationship did Deloitte have to Livent...

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a) What relationship did Deloitte have to Livent? Livent had appointed Deloitte as its auditor for the services from 1997 to 1998. Deloitte involved in the preparation of a press release and comfort letter, as well as approving the same. It got circulated in advance of a public debenture underwriting in October 1997. The audit preparations and approval of Linent's financial statements were also done by Deloitte, which got completed in April 1998. b) Why was Deloitte found negligent to Livent? While performing the audit services, Deloitte found irregularities in the accounts of Livent, but they denied it when Deloitte raised their concerns. Even after noticing, Deloitte chose to continue the services. The auditor was supposed to report the irregularities when they first identified it. Since nothing was reported, the shareholders of Livent put their trust in the offering documents provided and raised funds for capital without knowing the actual solvency position Livent. c) Do the illegal acts of executives of Livent minimize Deloitte's liability?
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Unformatted text preview: The Ontario Superior Court of Justice found that the professional standards were not met by Deloitte. Deloitte inturn argued that the losses incurred by Livent were caused by themselves by their illegal acts. The Supreme Court reduced the ruling of the lower courts' judgement regarding the liability of Deloitte by around $45 million. Deloitte mentioned that the illegal activities by the officials have been carried over for years and the auditors are made the route to solve their huge liabilities to their shareholders. d) Why would the Supreme Court of Canada hear the case? Being the auditor of Livent, it was the duty of Deloitte to provide accurate information to the shareholders of Livent. Deloitte allegedly failed to detect and thereby act on the fraudulent behavior of their client. The court could decide upon the liability level four each party and whether a reduction to be provided for Deloitte, considering the illegal aactivities from Livent's side....
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