Auditors and third parties

Updated: Aug 20, 2021

Auditors have no duty normally to persons relying on accounts audited by them. The contract is between the company or other organization and the auditor. The auditor has a duty to the organization and can be sued in the normal way for negligence. He is not generally liable to persons who might rely on the accounts in, say, lending money. However, there is a tendency for the law to take the attitude that where the auditor nows the purpose for which the accounts are wanted (i.e. to persuade someone to lend money) then if he is negligent he may incur liability.

Reference: The Penguin Business Dictionary, 3rd edt.

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James Knight
Editor of Education
James is the Editor of Education for Invezz, where he covers topics from across the financial world, from the stock market, to cryptocurrency, to macroeconomic markets.... read more.