Auditors' liability - Essay Example

Only on StudentShare

Extract of sample
Auditors' liability

Scandals such as those of the Bank of Credit and Commerce International (BCCI), Barlow Clowes, Atlantic Computers, Coloroll, Ferranti, Homes Assured, Levitt, Queens Moat Houses, Resort Hotels, Eagle Trust, London United Investments, Maxwell and Polly Peck have resulted in loss of jobs, savings, investments, pensions and taxation revenues. (Mitchell et al, 1991)
The audit of a company's financial statement poses a certain degree of risk for the auditors and the company. The auditors have to objectively audit a company that reflects a true picture of the company. Since the managers depend on the audit to help them understand the current scenario of the company to take future decisions, and investors use the audit to help them take investing decisions, the correctness of the audit carries high stakes for all. (Defintions)
Until recently, auditors had unlimited liability towards the public incase of negligence, breach of contract or fraud. Due to this very law, there have been cases in the past that have wiped the company clean due to gigantic compensations. Following the collapse of a company, third parties would often attempt to recover their losses from a solvent and insured auditor.
Faced with such claims, the common and civil law courts had to struggle between two ...Show more

Summary

In the United Kingdom, companies are required to get their accounts and financial statements audited by external auditors. These state guaranteed market of external audits are applicable to around 600,000 companies, schools, universities, trade unions, hospitals, government departments and charities who have to submit to an external financial audit by accountants belonging to one of the select accountancy trade associations…
Author : mazieleuschke
Save Your Time for More Important Things
Let us write or edit the essay on your topic
"Auditors' liability"
with a personal 20% discount.
Grab the best paper

Related Essays

Auditing and Accouning Ethics
Organisations other than very small companies should have an annual audit to ascertain, if the information presented in the financial reports is accurate. The audit committee, which performs the audit, plays a very important role in preventing financial reports from being fraudulent.
12 pages (3000 words) Essay
Why Auditors Must Be Independent?
Auditors must be independent in performing an audit. Independence means that the auditor can freely issue a qualified opinion, adverse opinion, disclaimer opinion without being influenced by many factors. The auditor's auditing standard no. 2 states that independence in mental attitude at all times is required.
12 pages (3000 words) Essay
Company Law liability
Sole Trade is suitable when the business is small in nature and the business activities very limited. When the business is started with Sole Trade. In this form of business the Sole Trader is liable for any loss to the business and Debts of business. Either profit or loss is born by the Sole trader only.
15 pages (3750 words) Essay
Reforming Auditor Legal Liability: Government, Practitioners and Scholars
In this context, any strategy implemented in modern organizations should be in accordance with specific standards either set through the application of certain rules for a while (ethical framework) or through appropriate orders implemented by the country’s
40 pages (10000 words) Essay
Fraud Detection The role of Internal, External and forensic Auditors
cts for the purpose of illegitimate monetary gains is different from distortion of information without causing monetary losses, which can not be termed as fraud. The practice is usually costly for people and organizations once it occurs. It is therefore important to ensure that
5 pages (1250 words) Essay
Parpgraising paragragh about phosphene and alkynyl legand
tern of bonding of phosphenes to d-metal comprises of a “o:” bond from ligand and metal, while there is a “pai” bond between metal and ligand, in the return direction. This makes the bonding of phosphines to d-metal perfectly analogous to the bonding of CO to a d-metal
1 pages (250 words) Essay
Big 4 Writing Samples
I achieved these enormous feat during my work in my father’s company. My father owns a mini business with employees of diverse culture and background and working in his
1 pages (250 words) Personal Statement
Find out how much would it cost
to get a custom paper written by a pro under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
YOUR PRIZE:
Apply my DISCOUNT