As per the common law, the auditor will be liable to cause harm to the third part if found guilty for gross negligence and fraud. The auditor does not intentionally harm as he is unaware of the users of the financial statements. To compare : An auditor’s liability to 3rd party for negligence based on ultra-mares, credit alliance, 1965 Restatement (Second) of Torts, and Rosenblum. Also, suggest the approach, preferred by auditors and what is best for the society.

Question

A number of cases have considered the auditor’s liability in relation to persons other than the immediate client. Even so, the AWA case established that: Select one: a. Duty of care and skill means following the accounting standards b.auditors have a contractual duty to oversee and review the work of inexperienced audit staff c.Auditors are only liable for the proportion of damages attributable to their actions d.Auditors have a duty of care only to the shareholders.

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Chapter 4, Problem 15RQSC

To determine

Concept Introduction: As per the common law, the auditor will be liable to cause harm to the third part if found guilty for gross negligence and fraud. The auditor does not intentionally harm as he is unaware of the users of the financial statements.

To compare: An auditor’s liability to 3rd party for negligence based on ultra-mares, credit alliance, 1965 Restatement (Second) of Torts, and Rosenblum. Also, suggest the approach, preferred by auditors and what is best for the society.

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