- 5 Marks
AAA – L3 – Q17 – Professional responsibility and liability
Explain five methods to reduce an audit firm's exposure to litigation claims for negligence.
Question
You are responsible for providing direction to more junior members of the audit department of your firm on technical matters. Several recent recruits have asked for guidance in the area of auditor’s liability. They are keen to understand how an audit firm can reduce its exposure to claims of negligence. They have also heard that in some countries, it is possible to restrict liability by making a liability limitation agreement with an audit client.
Required:
Explain five methods that may be used by an audit firm to reduce exposure to litigation claims.
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