To avoid successful allegations of negligence, there are a number of key mechanisms that the auditors of Prescilla Ltd. should have followed:

• The firm’s system of quality management should have been followed.
• Ensure that evidence is available to demonstrate that auditing standards were being followed and ethical requirements have been met.
• Effective planning of assignments, including the assignment of sufficient staff with the appropriate skills and training, as well as effective direction of resources during the assignment.
• The use of appropriate audit programmes and checklists to ensure appropriate focus and effective documentation and capture of evidence.
• Review of business and audit risks. This may have indicated a longer term viability problem, with both the heavy investment in e-commerce and the reliance on reserves in making this investment being important business risks that should have been managed.
• Regular technical training and updating of all staff and proper briefing.
• Direction, supervision and review of audit work.
• Consultation should have been undertaken where necessary, for example on contentious matters.
• Final review of the financial statements and audit documentation to determine that the audit opinion to be issued is appropriate.
• Professional indemnity insurance would provide an insurance protection should the company be faced with successful legal action.