Negligence of Auditors

Policy Considerations

In the past one decade, there have been rampant cases against auditors, reflecting both on the litigious nature of a plaintiff's bar, which encourages claims against independent certified public accountants

Owing to this, there have been numerous literatures encouraging the imposition of civil liability on accountants whose actions fail to conform to professional standards. Therefore, many courts after considering the scope of an auditor's vulnerability to negligence have sought to provide some policy considerations in an attempt to protect the auditors.

Some courts have analogized the law of products liability to adopt a predictable standard, which will help them measure an accountant's liability for negligence

. In addition, another important principle, which many courts consider is the cost-benefit limitation because it works differently when compared to the financial audit. Nevertheless, prior to determining a case of negligence, the court can now measure the potential profit...
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