Wednesday, June 24, 2009

Defamation and auditors 2

Another defence that is sometimes important to investigating auditors of fraud is found in section 8 of the Defamation Act.

Normally, the defence of justification to a defamation lawsuit requires that the defamation is literally true. For example, if the auditor makes the statement that the finance manager of a company stole money ten times from the company, but the manager only stole money 9 times, then the defence of justification would fail.

Under section 8 of the Defamation Act, the defence of justification will still succeed even if certain allegations are untrue provided that considering the rest of the true allegations, the false allegations do not materially injure the other party's reputation. There is probably little difference from the defamatory point of view whether a person stole money 9 times or 10 times, so the defence is likely to succeed.

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