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- October 23, 2019 at 4:22 pm #550543
Question: In respect of audited accounts, to whom does an auditor owe a duty of care Not to act negligently?
a) The company only
b) the shareholders only
c) All stakeholders
d) Anyone who purchases more shares in the companyOctober 24, 2019 at 12:04 pm #550654In the above question, I think that auditors owe a duty of care to both company and shareholders as well as anyone relying on it. Hence none of the options is correct. Also I don’t know whether a duty of care exists to a potential investor who later relied on a clean audit report to buy shares. This question is from the approved publisher practice kit but it seems to be wrong. There is no explanation in the practice kit.
October 24, 2019 at 3:36 pm #550687A company’s auditor owes a duty of care to the company only and only the company, acting through a majority vote of the members, can take legal action against the company for breach of that duty
Bannerman v RBS threw a spanner in the works but has subsequently been criticised
I believe that all the BIG 4 are currently embroiled in litigation where the allegation is that they were negligent (Thomas Cook and Ernst Young is, of course, the latest headline case)
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