The Liability of Auditors beyond Their Clients: A Comparative Study

Abstract:     
The constant evolution of the importance of auditors’ functions during the twentieth century brought with it considerable scholarship on their responsibility. Indeed, confronted with the insolvency of a company in which they have invested, shareholders, investors, and offerors increasingly seek to recover their economic loss from auditors who, solvent and insured, were negligent in auditing the financial statements of the company in question. Accordingly, the study of the liability of an auditor towards third parties has a growing importance. In this article the author analyzes comparatively auditors’ liability under the common law of England and Canada and under the civil law of France and Quebec. Specifically, she attempts to show how courts use the duty of care in the common law and causality in the civil law to limit this liability. Furthermore, she pays particular attention to the influence of Canadian, English, and French law on the law of Quebec. The author not only delineates this influence, but also comments on the extent to which the law of Quebec may legitimately take inspiration from the English and Canadian common law and the civil law of France in the area of auditors’ liability to third parties.

Number of Pages in PDF File: 59

Keywords: auditor, liability, history, historical perspective, insolvency, liability of an auditor towards third parties, Common Law, civil law, compartive law, duty of care

Accepted Paper Series