Defending Audit-Malpractice Cases

Contributory negligence of the client can be regarded as a defense to the liability of the accountant for malpractice.

It has to be proved that the negligence of the client has proximately contributed to the accountant’s failure to perform.

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The client’s negligence is a defense only when it has contributed to the accountant’s failure to perform his contract and to report the truth.


Common Law Liability

Auditor must perform professional services with due care.

Evidenced by having exercised same degree of skill and judgment possessed by others in the profession.

Adherence to generally accepted auditing standards can provide evidence of having exercised due care in the audit.

Due care includes exercising the degree of professional skepticism expected in the audit of financial statements.

Audit failures – all possible causes – breach of contract, tort, deceit, and fraud.