Auditing and Accounting Cases 4th Edition by Deborah Freier,Jay Thibodeau

Exercise 3

Consider an auditor's common law liability to third parties. Describe the difference among the three levels of failure to exercise due care: ordinary negligence, gross negligence, and fraud. Based on the case information, comment on the possible level of failure that was seemingly exhibited by BDO Seidman in their audit of Ascot Partners. Are there any factors that you believe could be used in defense of the auditing firm?