Auditor Liability in Negligence: Policy and Case Law

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Auditor Liability in Negligence: Policy and Case Law

Policy

Auditors in Australia are subject to a wide range of laws, from contract law to common law and statute (Harlow 1995p.54). Their conduct is also regulated by various professional bodies, including the Institute of Chartered Accountants in Australia (ICAA) and CPA Australia. The government plays its part in regulating auditors through its agencies like Australian Securities and Investment Commission (ASIC) and the Australian Competition and Consumer Commission (ACCC). The common law tort of negligence imposes a duty of care on auditors. Holding auditors liable requires one to prove that a breach of duty occurred, and that the breach caused damage within the context of the case (Harlow 1995).

According to Hodgson et…