Steven, an accountant, returning from his office, calls into a pub for a relaxing drink. He bumps into Paul, an old school friend, whom he has not seen for many years. During the course of the conversation over a number of pints, it emerges that Paul has recently inherited a substantial sum of money and is interested in investing in local businesses. Steven mentions that one of his clients, Precarious Ltd, is seeking financial backing and would make an attractive investment. By chance, he has a copy of the company’s accounts in his briefcase which he gives to Paul. Relying on these accounts, Paul invests £10,000 in Precarious Ltd, but loses everything when Precarious goes into liquidation six months later. In fact, the accounts had been prepared negligently and did not reflect the parlous state of the company’s affairs. Advise Paul.

Steven, an accountant, returning from his office, calls into a pub for a relaxing drink. He bumps into Paul, an old school friend, whom he has not seen for many years. During the course of the conversation over a number of pints, it emerges that Paul has recently inherited a substantial sum of money and is interested in investing in local businesses. Steven mentions that one of his clients, Precarious Ltd, is seeking financial backing and would make an attractive investment. By chance, he has a copy of the company’s accounts in his briefcase which he gives to Paul. Relying on these accounts, Paul invests £10,000 in Precarious Ltd, but loses everything when Precarious goes into liquidation six months later. In fact, the accounts had been prepared negligently and did not reflect the parlous state of the company’s affairs. Advise Paul.