Auditors' Liability: Repercussions and Penalties

AUDITING 1
AUDITING

AUDITING 2
Summary:
This report talks about the repercussions that the auditors have to face when they are unable
to exercise an utmost diligence and due care in the carrying of their duties as professionals.
This report throws light on the recent cases that have led to these penalties, the historical
developments and the types of the penalties that exist and that are imposed on the
professionals.

AUDITING 3
Contents
Introduction and background:....................................................................................................4
Current stance on auditor’s accountability:................................................................................4
Regulations on audit liability:....................................................................................................6
Historical developments in law:.............................................................................................6
Examples:...............................................................................................................................7
The following are the examples which deals with the auditors liabilities:.........................7
Barclays Bank v Grant Thornton (High Court, 2015):.......................................................7
Mehjoo v Harben Barker & Ors (Court of Appeal, 2014):.................................................7
Conclusion:................................................................................................................................7
References..................................................................................................................................9

AUDITING 4
Introduction and background:
The auditors are currently responsible for both the civil as well as the criminal offences. The
criminal offences takes place when the companies breaches the rules and the regulations that
have bene imposed by the government. There are mainly 2 types of laws, one being criminal
which deals with the transactions between the entity and the state and the civil law that deals
with the transactions between the individual and the company.
Current stance on auditor’s accountability:
The criminal offences takes place when the auditors follow different laws that exists in the
other countries. These laws confer to the countries in which these companies operate.
Therefore, the auditors are held accountable for the acts of fraud and insider trading.
This include various sections that governs the fact of who could be an auditor and the way in
which these auditors are appointed and the way in which they could be removed and also
include the functions and the duties of the auditors.
One of the most important offence under the companies Act is the section 495 which deals
with the fact of knowingly or recklessly causing a report which includes any matter which
could be misleading or is false or is deceptive in any manner.
Civil offences on the other hand include 2 pieces of civil law. The first piece being contract
law and the other being law of tort. Both of these pieces deals with the liability of the auditor
to the clients and also to the third parties.