In a recent Aruban case before the Supreme Court the central question was whether an accountancy firm (a “Big Four” firm) had acted unlawfully when conducting an investigation into the conduct of the then general director of an Aruban foundation. The former general director sought a declaratory judgement and to that extent had argued (i) that the investigation carried out by the audit firm shows serious defects, (ii) that the requirements of fair hearing have not been met and (iii) that he lost his job as a result of the investigation. The Court of First Instance rejected the claim. However, on appeal the claim was honored by the Joint Court of Justice.
In the opinion of the Joint Court of Justice, the audit of the audit firm has acted in violation of the code of conduct on person-centered auditing by the Royal Netherlands Institute of Chartered Accountants, the professional body for accountants in the Netherlands. Aruba has no (comparable) standards of conduct for accountants, but according to the Joint Court of Justice the concordance principle means that the standards for accountants developed in the Netherlands apply mutatis mutandis to the conduct of Aruban accountants. Seeing that, in the opinion of the Joint Court of Justice, insufficient rebuttal had been applied and the final report from the audit firm contained ambiguities and imperfections, the final report showed a more negative overall picture of the former general director than was justified by the facts. All in all, the Joint Court of Justice concluded that the audit firm has acted unlawfully because the final report did not meet the expectations of a reasonably acting and reasonably competent audit firm.
The audit firm filed an appeal in cassation against that judgment. The audit firm stated (inter alia) that the Joint Court of Justice has applied an incorrect standard for the question of whether an auditor acted unlawfully towards a third party in the exercise of his profession. The Supreme Court rejected the cassation appeal. According to the Supreme Court, an accountancy firm must take due care when performing activities. The care to be taken is partly determined by the rules of conduct and professional rules for accountants. The fact that Dutch conduct and professional rules do not formally apply in Aruba does not mean that these rules do not play a role for Aruban accountants. These rules are generally accepted standards of care for the conduct of an accountant and indicate what – also in Aruba – is appropriate and considered acceptable in social and economic life.
This ruling by the Supreme Court, the highest court of the Kingdom, can also have consequences for other accountants working in Aruba, Curaçao, Sint Maarten and the other islands. This is because the case also involved the question of the testing framework for accountants. In the Netherlands, various professional rules of conduct have been drawn up on the basis of the law. They don’t exist on Aruba, and the accountancy firm in question relied on that. Although the Dutch professional rules of conduct rules do not formally apply to Aruba, these are generally accepted standards of care for the actions of accountants towards third parties. Those generally accepted standards are also important to determine whether there is an unlawful act, even if it concerns an unlawful act under the law of Aruba. This means that the auditors in the Caribbean parts of the Kingdom must, inter alia, meet the same standards with regard to person-centered investigations as their colleagues in the Netherlands.