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Chapter 83 4

 recognise circumstances in which professional accountants may have legal
liability and the criteria that need to be satisfied for legal liability to be
recognised

 describe the factors to determine whether or not an auditor is negligent and
discuss the auditor’s potential liability in given situations

 compare and contrast liability to client with liability owed to third parties (i.e.
contract vs establishing a duty of care)

 evaluate the practicability and effectiveness of ways in which liability may be
restricted including the use of liability limitation agreements

 discuss and appraise the principal causes of audit failure and other factors that
contribute to the ‘expectation gap’ (e.g. responsibilities for fraud and error) and
recommend ways in which the expectation gap might be bridged

and answer questions relating to these areas.

The underpinning detail for this chapter in your Integrated Workbook can
be found in Chapter 8 of your Study Text

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