Question

Distinguish between common-law liability and statutory liability for auditors. What is the basis for the difference in liability? (Chapter: Legal, Regulatory, and Professional Obligations of Auditors)

Answer 1

Liability under common law originates from the judgements passed by the jury pertaining to various cases solved. These judgments given on precedent cases will be the base and will be applied to cases that are heard after the precedent judgement is passed, if the facts and circumstances of the latter are similar to the former. These liabilities are generally civil and not criminal in nature.
Liability under statutes arise from statutes/acts imposed by the government. They may be civil or criminal in nature. Auditors are likely to be held for negligence if duty if they do not abide the Generally Accepted Audit Standards or any rules of the statute they are auditing under.