ABSTRACT
Auditors attest to whether a firm’s financial statements fairly present its financial position, results of operations, and cash flows in accordance with generally accepted accounting principles. In the United States, auditors’ liability to third parties generally arises when they provide an unqualified audit opinion on financial statements that are subsequently alleged to have been misstated due to negligence or fraud. For our discussion, we generally confine our focus to auditor liability under US law because most prior research on auditor liability has focused on the US legal system.
