Business judgment v. audit judgment: why the legal distinction?

Article Abstract:

The business judgment rule is invoked only in litigation involving corporate directors but not in cases involving public auditors. The reason for this legal distinction between bad business judgment on the part of corporate directors and bad audit judgment on the part of public auditors lies in the interpretation of the legal concepts of 'burden of proof' and 'standard of care.' As a rule, when the standard of care of a defendant is low, as is the case in litigation against corporate directors, the burden of proof must be based on clear and convincing evidence. When the standard of care of a defendent is high, such as in cases against public auditors, preponderant proof is all that is needed to prove a defendent's liability. Auditors are thus more vulnerable to third-party suits than corporate directors since the degree of their explicit duty is considered to be more clearly defined.

Laws, regulations and rules, Corporate directors, Burden of proof, Malpractice, Business judgment rule

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A greener audit

Article Abstract:

Auditors have included environmental management systems in their auditing process to understand better the outcomes of business and save firms from potential liability cases. Environmental auditing follows a different framework from the usual auditing procedures. It considers the impact of a company's operations on the environment such as the amount of natural resources it uses up and the type and amount of waste it generates. The outcome of the audit determines whether the company will be subjected to environmental fines and assesses the impact of these penalties to its financial condition.

Analysis, Environmental auditing

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Future Audit of A Day in My Life

Article Abstract:

A portable audit micro is the most advanced tool that an auditor can rely on for his work. The system accumulates all hours and makes a summary of work-completed-to-date and estimated-time-to-completion. All sample data and the work performed on them and the test evaluation results are recorded on electronic work papers for the review. At the year end, all the analyses of transactions and balances are carried out by extracting the data from the client's computer system.

Computers, Digital computers, Auditing, Tools, evaluation, Microcomputer, Computers and Data Processing

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