英语论文网

sed costs to settle lawsuits which include the management time and insurance premiums. Moreover, audit firms have suffered negative impact on reputation due to the negative publicity arising from litigation.

Also, from the article entitled 'Auditor liability to third parties: an international focus', it is claimed that the increase in litigation for auditors has led to some detrimental effects. One of the effects is accounting firms now have became more persistent in rejecting the engagement with clients that are viewed to possess high-litigation-risk. Besides that, there's a decrease in the availability and increase in the cost for professional liability insurance. Eventually, many of the experienced accountants gradually depart from the profession.

In addition, Bialkin and Cooper (1986) warned that the trend of expanding the scope of auditors' liability to third parties will result in a fall in the quality level as well as the scope of services provided by the profession.

5.2 减少审计师责任的需要——5.2 The Need to Minimize Auditors' Liability

Therefore, there's a need to minimize auditors' legal liability. We need to minimize the legal liability of auditors because if the legal liability of auditors continues to rise without any control enforced, the profession might face a severe lack of experienced people in the profession. Accountants and auditors will start quitting the field fearing that they might be the next to face litigation due to negligence. This will eventually results in a chaos in the corporate world when the day where no competent auditors are available to audit the financial statements arrived.
In order to minimize auditors' legal liability, steps have been taken by the professionals and by individual firms.

5.3 减少审计师责任的方法——5.3 Ways to Minimize Auditors' Liability

A special committee was formed by the American Institute of Certified Public Accountants in the late 1985 in order to develop a legislative program for liability reform. The program focuses to limit the scope of auditors' liability to third parties by retaining the privity standard.

Privity approach, Restatement approach, Foreseeability approach

Derek K. Chan (2002) concluded in his paper that from an efficiency approach, the privity approach is the best approach to confine an independent auditors' work if compared to Restatement approach and foreseeability approach. This is because privity approach provides the firm a credible mechanism where the firm can identify lenders into two groups within its own discretion - 1. Lenders who are eligible to recover their losses from the auditors; 2. Lender who are excluded from recovering their damages from the auditors. Restatement approach provides less flexibility for the firm to decide which lenders are eligible, hence expands auditors' liability. The foreseeability approach offers no flexibility at all to the firm as this approach broadens auditors' liability to include foreseeable third parties who will rely on the audited financial statements.

In our opinion, the privity approach is in fact the best approach thus far in order to limit auditors' liability.

Furthermore, in order to minimize auditors' liability, auditors should be setting proper audit plans and perform the best audit本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。