Ch4- Prof Resposibility And Liability

Question 1

Directors- Ensure compliance with laws and regulations (& internal Controls)
Auditors- Obtain sufficient evidence of compliance, perform tests and recommend safeguards etc.

Question 2

Restricting auditors liability

Answer 2

-Screening potential audit clients
-Take specialist legal advice
-Detailed engagement letter
-Insurance- Prof indemnity
-Perform high quality work
-take on LLP status

Question 3

Legal liability- Per auditors

Answer 3

Breach of contract- auditor failed to comply with engagement
Tort of negligence- Auditor didn’t audit properly (e.g. bank didn’t get £1m loan back)