Alfred is the auditor for Maya Bhd. He has certified the accounts of the company in ignorance of the fact that the managing director (MD) had systematically falsified the books over a period of years. Amongst other things, the MD had erased the dates on the invoices in respect of stock purchases and substituted them with later dates so that the price payable for them could be included in the outgoings for the next period. This was done to conceal the fact that the company was suffering huge losses. Although Alfred discovered the tampering, he only went as far as seeking an explanation from the managing director, and being satisfied with it, did not carry out any independent investigation into the matter. This led to heavy losses to the company. In June 2022, Laura bought shares in Maya Bhd based on the year end auditor report prepared by Alfred. The report stated that the company had made strong profits over the past two years and it presented a picture that the company would enjoy sustained profits for the foreseeable future. To Laura's dismay, she discovered that the statements in the audit report were erroneous and did not present the true. 

Discuss the liability of Alfred towards Maya Bhd and Laura respectively in the above situations.

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Alfreds Liability Alfreds actions raise potential liability towards both Maya Bhd and Laura due to h... View the full answer