Auditors' duties and liabilities with respect to the client company and third parties

Abstract

The principal duty of the auditor towards his client company, enshrined within the Companies Act is to present a report, on the annual accounts prepared by the Board of Directors of the company, advising whether in his (the auditor's) opinion, the annual accounts have been properly prepared in accordance with the Companies Act, and in particular whether 'a true and fair view' is given of the profit or loss of the company for the accounting period and of the statement of affairs of the company, as at the end of the relevant accounting period. Other duties, like the duties to maintain independence and confidentiality, are subsidiary yet complimentary to this principal duty. Other duties wrongly attributed to the auditor, like the duty to prepare financial statements or, the responsibility for the prevention and detection of fraud or irregularities, fall outside the scope of his terms of reference and the auditor would better be advised to refrain from assuming such duties and responsibilities.