In late June 2011, the Australian Federal Court was asked to
look at the scope of a director's duties when signing off
company accounts and the annual reports. The Australian Securities
and Investment Commission ("ASIC") sued the directors of
Centro Properties Limited, Centro Property Trust and Centro Retail,
on the basis that they had breached the Corporations Act 2001 (Cth)
when they failed to notice "significant errors" in the
consolidated financial statements of this group. The directors
claimed to have relied on the work done by their auditors, PWC, in
signing off on the accounts and report. The court looked at the
degree to which a director is required to critically review
financial statements, so as to essentially form an educated
independent opinion as to the accuracy of the accounts –
the court held that directors must have sufficient financial
literacy to understand financial statements and the relevant
accounting standards to be followed, and it was not
