Ignorance is not bliss - Judge reminds Directors where their responsibilities lie

Justice John Middleton recently decided in favour of ASIC that the Directors of Centro should be held accountable by the Court for their failure to call in to question the Company’s financial report which included a huge but basic accounting error.    

The Judge ruled that Centro’s directors needed only questioning minds – not ‘infinite knowledge or ability’ – to spot billion-dollar mistakes in the Company’s financial statements.  

“This judgement makes it clear that directors cannot delegate away their responsibilities and simply rely only on management or professional advisers but must bring their own minds to bear on the issues. 

This ruling does not so much raise the bar for directors as remind them where the bar has always sat.”

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