BDO International case kicks off next week

A court battle to decide whether BDO International will be dragged back into BDO Seidman's $521m (£348m) negligence case kicks off next week.

The case, which starts on Monday at the Circuit Court of Florida, could be the first instance of a network facing punishment for a member firm's problems.

BDO Seidman is currently appealing against a massive damages claim after Portuguese company Banco Espirito Santo successfully argued the firm was negligent in its audits of factoring company Bankest.

When the case first went to court, a judge ruled that BDO International shoud not be held liable but, after BDO Seidman launched its appeal, it was decided that the matter should be put to a jury.

If the jury decides BDO International should be dragged back into the case, it could set a precedent for international networks being held liable for claims involving their member firms.

Auditors from BDO Seidman were accused of 'accounting malpractice' and being 'grossly negligent' in audits between 1998 and 2002.

Banco ES claims BDO International had 'the right to control' BDO Seidman. 'BDO International controls BDO Seidman right down to how they type their letters,' said the bank's lawyer Steven Thomas.

BDO International's lawyer claimed control relationships were not so strict, with only ten people working at the umbrella body, and described the control claims are 'puffery'.

Further reading:

BDO case sparks global network alert