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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 companyIn 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.
A 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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