Your Firm Has Been the Auditor of Chappello Design and Construction

question 40

Essay

Your firm has been the auditor of Chappello Design and Construction Limited for several years. During the current year, a consultant on staff at your firm assisted Chappello in the selection and implementation of a new computer system. The audit staff were not involved in this process.
The new system was an enterprise-wide system that was to be implemented without modification using the direct cut-over approach (the old system was discontinued and the new one continued the next day). Unfortunately, staff had extreme difficulty using the system and discontinued it after two months. During that time, Chappello was unable to document and bill its work for progress billings, and borrowed heavily to continue to pay its employees while work continued. The company reverted to its old system and claims that it has lost hundreds of thousands of dollars in revenues as it was unable to issue quotes and bid on new contracts.
Chappello has sued your firm for negligence with respect to the implementation of the computer system.
Required:
Which defences should the firm use? Support your answer with reasons.

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Definitions:

Species Being

A concept in Marxist theory referring to the inherent nature of human beings to engage in creative and productive work in a way that distinguishes them from other species.

Unique Potentials

The distinct and individual capabilities or talents every person has, which can be nurtured and developed to achieve personal growth and fulfillment.

Other Animals

A term used to emphasize the distinction or relational view between humans and non-human animals, often in discussions of ethics or rights.

Reciprocal Relationships

A mutual interaction or exchange between parties where each benefits or is influenced by the actions of the other.