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Auditor's Legal Liability - Coggle Diagram
Auditor's Legal Liability
Introduction
Auditor's can be sued by clients, shareholders, bankers, investors, creditor and government for failure to perform professional service adequately
Increase lawsuit againts auditors business & audit failre
Key Legal Terms
Privity
Tort
Negligence
Doctrine
Plaintiff
Defendent
Test on Proximity
To identify & forecast relationship
Type of relationship:
Privity
Foreseen party
near privity
Foreseable party
Audit Expectation Gap
Different exist between public expects of auditor and auditors believe their responsibilities should be
Components : unrealistic expectations on part of users performance gap
Implications : loss confidence , increase lawsuit
Actions : expand audit report
Common Law
Auditors can be held liable to : client and 3rd party
How to bring legal action against auditor
duty of care
damages
breach of duty of care
Statutory Law
Securities commission act 1893
Financial secures act 2013
Securities industries act 1983
Amla 2001
Companies Act 2016