MODULE 10

Question 1

What does Negligence mean?

Answer 1

A breach of legal duty of care, which results in loss or damage being suffered by another party

Question 2

To establish Negligence and seek damages a claimant must prove:

Answer 2

1. The Accountant owed a duty of care to the claimant
2. The work was negligently performed
3. The Claimant suffered a quantifiable, reasonably foreseeable loss because of the auditors negligence

Question 3

What three groups do Auditors have a duty of care for:

Answer 3

1. Third Parties
2. Audit Clients
3. Shareholders

Question 4

What three factors are considered when establishing a duty of care?

Answer 4

1. The loss arising was reasonably foreseeable
2. A close and direct relationship existed
3. The imposition of duty of acre was fair, just amend reasonable

Question 5

What are certain quality measures firms can put in place to try avoid negligence:

Answer 5

1. Formalising.the basis of the engagement
2. Identifying the risk profile of potential clients
3. Ensuring a sound audit approach is followed