What does the Centro case mean for directors?

Directors must scrutinise company accounts.

That is the clear message emerging from Monday's Centro decision, and the message headlined in all the media reports of the decision.

What is equally significant for directors is what doesn't appear in the newspaper headlines – issues such as:

• do directors have to be accounting standard gurus?
• how do directors spot the ticking bomb buried deep in a massive board pack?

Background

ASIC argued that Centro's directors had breached their duties under sections 180 and 344 of the Corporations Act, because its 2007 annual accounts had not complied with the Corporations Act and the accounting standards:

• the accounts had misclassified a number of borrowings as non-current liabilities when they were actually current;