Question

Damage to another person's property or financial interests can also trigger negligence liability. When licensed professionals do not exercise the degree of care expected of someone with their level of skill and training, we call it professional negligence (liability) or malpractice. One such example is the professional liability risks faced by accountants. One particular issue with accountant malpractice is that of who may sue. Accounting clients have customers, suppliers, and lenders who sometimes rely on an accountant's audit of the client's books. If the audit fails to uncover a client's serious financial problems that later cause losses to these third parties, the result might be a lawsuit against the auditors. Under what circumstances should an accounting firm be held liable for careless auditing work? What Duties are owed by the What liability exists? Examine the accountant? standard of care required of an accountant for purposes of negligence liability. between three different approaches to an auditor's liability to third persons for negligence? Distinguish Submission Instructions

Answer 1

Auditor liability is increasingly concerning, both in terms of audit quality and the reputation of the profession but also in terms of the cost to the industry and the barriers this creates to competition within the audit market.Auditors are potentially liable for both criminal and civil offences. The former occur when individuals or organisations breach a government imposed law; in other words criminal law governs relationships between entities and the state. Civil law, in contrast, deals with disputes between individuals and/or organisations.To successfully sue your accountant you need to be able to prove a financial loss, either to you personally or to your business. It is therefore important to have gathered as much evidence as possible to support your claim in case your matter sends up going to court. It’s vital to prove the advice you were given fell below a reasonable standard and resulted in your financial loss,

Auditors are potentially liable for both criminal and civil offences. The former occur when individuals or organisations breach a government imposed law; in other words criminal law governs relationships between entities and the state. Civil law, in contrast, deals with disputes between individuals and/or organisations.Like any individual or organisation auditors are bound by the laws in the countries in which they operate. So under current criminal law auditors could be prosecuted for acts such as fraud and insider trading