James Hardie - Auditing and Assurance

During October 2009 the Australian Securities and Investment Commission took action against executives and directors of the Centro Proprieties Group and Centro Retail Group. The executives included the former chief executive officer and the former chief financial officer as well as directors from the board of Centro. The ASIC was proceeding with the case on the basis that they assumed that the aforementioned had breached their statutory duty of care and diligence owed to the Centro entities and had therefore breached ss 180(1), 601FD(1) and 344(1) of the Corporations Act 2001 (Cth). The directors had approved financial information for Centro for the year ending 30 June 2007. The financial statement originally classified $1.5 billion in debt as non-current liabilities when it was in fact current liabilities. The statements also failed to disclose $1.75 billion in guarantees. The statements also failed to disclose $600 million of short-term liabilities that had been classified as no current liabilities. Management of Centro and their external auditor, PricewaterhouseCoopers failed to detect any errors in the financial statements.
On June 27 2011, the court handed down its findings. The court decided that the directors and executives of Centro were in breach of their duties when they signed off on the misleading financial statements.

In 2007 the ASIC commenced legal proceedings against former directors and officers of James Hardie Industries Limited. In 2001 the company approved a foundation that would be used to compensate victims of asbestos. James Hardie announced that the foundation would have enough funds to cover legitimate claims. The company had taken advice from PricewaterhouseCoopers based on 50 years of claims from victims and prepared a cash flow model in order to ensure sufficient funds were available. It later became obvious that the foundation was well underfunded by a figure well in excess of $1 billion.
The initial decision handed down by Gzell J