possibility of legal action, page-4

March09

The fact that PKF subcontracted the audit of the Asian subsidiaries is irrelevant (did they subcontract it or did the subsidiaries appoint their own auditors?). PKF have signed off the audit report on the CONSOLIDATED accounts. Even if they didn't audit the subsidiaries directly they are still responsible for their audit report on the consolidated accounts.

PKF would therefore have had to satisfy themselves that the Asian subsidiaries were either not material to the Consolidated accounts or that the audits of the subsidiaries complied with Australian Auditing standards and listing requirements and that the work of the other auditor could be relied upon.