Question
The client companys accounting team incorrectly classified $10 million current liabilities as non-current liabilities and this material mistake was not detected by the clients directors
The client companys accounting team incorrectly classified $10 million current liabilities as non-current liabilities and this material mistake was not detected by the clients directors or the auditors. Following the discovery of the mistake, the shares in the client lost value rapidly and the company was placed into administration. In response to a tort of negligence lawsuit by the client, which of the following can be used by the auditor as a valid defence:
A. | The auditor did not breach the duty of care. | |
B. | The auditor does not owe a duty of care to the client. | |
C. | The client is also at fault and should be responsible for a proportion of its own financial loss. | |
D. | A and C | |
E. | A, B, and C |
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