$19.95 Buy and instantly download this paper now
Following the collapse of Enron and WorldCom and the flow on effects to Arthur Anderson, legislatures world wide are recognizing the need to reform the exposure of auditors and their firms to claims of negligence. This paper examines the merits of limiting the legal liability of auditors. The paper considers the measures recommended in Corporate Law Economic Reform Program (CLERP 9) and explores other practices adopted around the world.
From the Paper:"Many of the principles setting out the legal liability of auditors are found in the common law. In the case Re: London & General Bank Ltd (No. 2) , the court held that an auditor must exercise reasonable care and skill, the level of which was dependant on the circumstances. These findings were confirmed in Re: Kingston Cotton Mill Company (No. 2) , where Lopes stated that the auditor was "...a watch-dog, but not a bloodhound" and that he was only required to investigate matters which aroused suspicion. These standards of reasonable care and skill are not static, they change with time, per the findings of Pennycuick J in Re: Thomas Gerrard & Son Ltd."
Cite this Analytical Essay:
Auditor Liability (2005, June 05) Retrieved March 09, 2021, from https://www.academon.com/analytical-essay/auditor-liability-59145/
"Auditor Liability" 05 June 2005. Web. 09 March. 2021. <https://www.academon.com/analytical-essay/auditor-liability-59145/>