Auditors and Legal Liability: Case Study Analysis and Strategies

This report examines the legal liability of auditors, focusing on the case of Royal Bank of Scotland (RBS) vs. Bannerman Johnstone Maclay. The report analyzes the auditor's responsibilities to clients and third parties, exploring the concept of duty of care and negligence. It delves into the implications of criminal and civil liabilities that auditors may face. The report also discusses strategies for enhancing audit quality, including adherence to International Standards on Auditing (ISA) and the importance of maintaining auditor independence. Furthermore, the report provides recommendations for auditors to minimize litigation risks, protect their professional integrity, and improve audit effectiveness through careful planning, evaluation of internal controls, and business risk assessment. The report emphasizes the need for auditors to understand their legal and ethical obligations to ensure sound financial reporting and maintain public trust.