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:

Supplementary Classifications

Additional categories or groupings that complement the primary system of classification, often used to provide more detailed information.

V-codes

Diagnostic codes used in health care to indicate factors that influence health status and contact with health services, which are not due to a disease or injury.

E-codes

E-codes are a classification system used in health informatics for coding external causes of injuries, poisonings, and accidents.