The para in the question which mentions the legal case goes on to explain that, actually, there is no evidence forthcoming from the directors about the matter – not even representations which, it is claimed, were provided to the group auditor. The thing about professional scepticism is that if the auditor is sceptical about one thing – it should be extended to other things – so the answer is not confined to consideration of the legal case alone, but the wider implications of not having sufficient evidence, etc.