Exam 21: The Auditor and Liability Under the Law

Since the 1989 Companies Act accounting firms have been able to form limited liability companies. Few large firms have taken this option to protect partners. Which of the following is NOT given as a reason for this?

Which of the following statements is most correct? ?

Is compliance with the auditing standards a complete defence against auditor negligence? ?

The Caparo Industries case was one of the defining cases regarding auditor liability in the 1980s. The case went as far as the House of Lords. What did the Lords conclude the primary purpose of an annual financial statement was? ?

Auditors may be sued for negligence under civil law if their standard of work is below that which is expected. A key element that needs to be proved in an action of negligence is:

In the case of ADT Ltd vs BDO Binder Hamlyn (1996) where Binder Hamlin was found negligent and ordered to pay £105 million in damages (though the case was ultimately settled for £50 million), what specific action by the auditor was found to make them liable?