文档介绍：CHAPTER 4 LEGAL LIABILITY OF AUDITORS
Objectives
l   What’s the legal liability of auditors
l   Knowing some terms ‘s definition
l Describing auditors’ liability to clients mon Law
l What’s the auditor s’ Common Law liability to third parties and the types
l Knowing auditors’ liability to third parties under Statutory Law and the types
Terms:
Common Law pilation of financial statements
编制财务报表
Constructive fraud 推定舞弊
Due diligence应有的勤勉
Error and fraud
Gross negligence 重大过失
Irregularity
Negligence 过失 Precedent 先例
Registration statement 登记表
Restatement of Law of Torts
Review of financial statements
Scienter 故意
Securities Acts of 1993 《1933年证券法》
Securities Exchange Acts of 1934《1934年证券交易法》
Statutory Law 成文法
Third-party beneficiary 第三方受益人
Contributory negligence 共同过失
Criminal liability 刑事责任 Defendants 被告
Plaintiff 原告 Engagement letter 业务约定书
Proximate cause 直接原因 Recourse 追索权
4-1 Outline
1. Unique vulnerability of Accountants to Lawsuits
If a CPA is negligent in expressing an opinion on financial statements, literally millions of investors may sustain losses.
2. Definitions of terms
(1) negligence-----ordinary or simple negligence, may be viewed as “failure to exercise due professional care”.
(2) Gross negligence-----reckless disregard for one’s professional responsibility, lack of even slight care.
(3) Fraud------knowingly to misrepresent a material fact
(4) Constructive fraud-----not knowingly to deceive , gross negligence has been interpreted as constructive fraud.
(5) Privity-----a relationship between parties to a contract.
(6)Third-party beneficiary
(7)Engagement letter----written contract
(8)Breach of contract(违约)
(9)Proximate cause-----someone’s false leads to others’ losses directly
(10) Plaintiff
(11)Contributory negligence
(1)  Comparative negligence
(2)  Common law------unwritten law
(3)  Statutory law------written law
Litigation placed in perspective
(正确看待诉讼)
AUDITORS’LIABILITY TO THEIR CLIENTS MON LAW
1. CPA liability