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Auditor's Legal Liability - Coggle Diagram
Auditor's Legal Liability
Who can sue the auditors?
The client
The Third Party
The federal government
Why the auditors are being sued?
Lack of Duty of Care
Failure to exercise duties that are expected of them as stated in the engagement letter
Negligence
Ordinary Negligence
Absence of reasonable care
Gross Negligence
Lack of even slight care equivalent to reckless behaviour
Constructive Fraud
Unusual negligence even though there was no intent to deceive
Fraud
Intention to deceive exist
Failure to comply with the regulatory requirements
How the auditors may defend themselves?
Lack of duty to perform
Nonnegligent performance
Contributory negligent
Absence of causal connection