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Palace Enterprises Ltd (PE) is a public company dealing in manufacturing computer equipment. The business has been growing so rapidly that the directors of the company have not prepared any reports this year. Moreover, the company secretary has prepared her financial report by cutting and pasting spreadsheet information from the company records quite randomly and without checking the accuracy or relevance of the records.
The auditing firm of 'Hardwick and Crown' is PE's registered auditor and has prepared audit reports for PE every year for the last 6 years. This year Hardwick and Crown raises concerns with the directors regarding the lack of reporting. Based on clear evidence, Hardwick and Crown also suspects that PE suppliers are supplying stolen computer parts to PE and informs the middle managers at PE that by accepting stolen computer parts PE is breaking Australian law. Hardwick and Crown is aware that the middle managers did nothing with this information and did not inform the directors of PE.
The following week PE sends a termination letter to Hardwick and Crown removing them as the company auditors.
Advise Hardwick and Crown of their rights, responsibilities and liabilities in relation to the above scenario.
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