ABSTRACT
Damages for breach of contract are designed to put the innocent party in a position he would have been in if the contract had been properly performed. In the instance of a statutory audit, even though the auditor is by law appointed by the shareholders, the auditor still concludes a contract with the entity to be audited. In terms of this contract, the auditor has a contractual obligation to perform the audit without negligence, as acting in a negligent manner will lead to a breach of contract and to compensation to place, usually the audited entity, in a position it would have been in if the auditor had not been negligent.
