Caparo and the careful auditor

Article Abstract:

The UK House of Lords has ruled in the Caparo decision that there is no single general principle providing a test for determining whether a financial statement maker owes a duty of care to all those who suffer economic consequences as a result of relying on the statement. Earlier cases have held that auditors owed a duty of care to financial statement users based on the premise that foreseen damage was synonymous with proximity. The Caparo case involved a purchaser of company shares who suffered a loss due to the inaccuracy of published accounts which the purchaser relied upon. The Lords ruled that auditors generally do not owe a duty of care to potential investors basing their decisions on audited accounts. There is concern in light of the decision that the business community will let auditors be less careful. However, the decision has not altered the statutory regime, and auditors cannot be cast by businesses as underwriters of published accounts for investment purposes.

Liabilities (Accounting), Cases, United Kingdom. Parliament. House of Lords

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Efficiency drive engages second gear

Article Abstract:

Howard Davies, the Controller of the Audit Commission, discusses the achievements of the Commission's first term and its goals for its second term. The Audit Commission works with about 600 district auditors and 200 auditors in private practice who work on local government audits in the UK. The Commission's goals are more focused on implementing previously announced initiatives, rather than announcing more ways in which the public sector can save money.

Officials and employees, Beliefs, opinions and attitudes, Davies, Howard

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Waste not, want not

Article Abstract:

The Audit Commission is an independent agency and is responsible for monitoring local government expenses and appointing auditors to do so. Because local authorities used to have the right to their own auditors, there is some resentment of the new law by local politicians. John Banham, the controller of audit at the Commission, is interviewed about the job and his views on local government finance.

Management, Local government, Intergovernmental fiscal relations, Powers and duties, Banham, John

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