Abstract:
This thesis provides and exposition of the nature and extent of civil liability that can be imposed upon auditors who fail to perform their role to the requisite standards in New Zealand with comparative analysis of the respective law in England and Australia. The auditors’ role is one that is vulnerable to litigation brought by both contractually engaged clients and third parties. Third party claims in negligent misstatement have significantly impacted auditors, whose reports are often widely disseminated and without their permission. Negligent misstatement has allowed third party plaintiffs to circumvent the formerly exclusive economic zone of contract and sue without privity, broadening the horizon of auditors’ potential liability. This excessive exposure to liability is irksome due to the secondary verificatory nature of the auditors’ role in providing information, not advice. This thesis provides a pragmatic overview as to the extent the auditors’ position exposure to civil liability. A number of topical areas of transition and debate are analysed: (1) the historical development and present nature of the auditors’ role; (2) the auditors’ contractual and tortious duties of care as informed by statute, and to whom those duties are owed; (3) causation, remoteness and measure of loss issues; (4) contributory negligence; and (5) potential legislative reformation. It is concluded that auditors often face disproportionate claims but the courts and legislatures are becoming more alive to this fact, and are engaged in developing mechanisms to limit the auditors’ civil liability.
