Consider the following statements and explain why they may be true or false:

(a) Auditors can only be successfully sued by parties with whom they have a contract.

(b) Auditors who during the course of their work come into possession of unpublished information which they use in a decision to buy shares in the company would only be subject to criminal law proceedings.

(c) Auditors are only likely to be found guilty of negligence if the plaintiff has actually relied on the audited financial statements.

(d) If auditors fail to discover that the manager of the payroll department has for a number of years been embezzling £30 000 annually, they are guilty of negligence.

(e) Companies and auditors can draft and put in place a liability limitation agreement which exempts auditors from being liable to the company for negligence.