Auditors liability to external client
Answers
Answer:
The issue of auditor’s liability is included in the syllabus for Paper P7, Advanced Audit and Assurance. Candidates need to understand and apply the principles of establishing liability in a particular situation, as well as being able to discuss the ways in which liability may be limited. The specific learning outcomes can be found in the Syllabus and Study Guide.
This article focuses on the issue of auditor’s liability in the UK, and therefore contains references to the UK Companies Act 2006, as well as UK-specific legal cases. Candidates other than those attempting the UK adapted paper are not expected to have UK-specific knowledge. The concepts discussed in this article however are broadly relevant and will help candidates to understand why this is an important issue within the auditing profession.