Motivating factors in lawsuits against independent auditors: experimental evidence on the importance of causality

Article Abstract:

A study was conducted to examine the role of proximate cause in the initial assessments and recommendations of plaintiff attorneys about filing lawsuits against auditors. Results showed that the degree of clients' dependence on the work of independent auditors influences proximate case while the presence or absence of non-causal misstatements in the financial statements does not. Findings also revealed that proximate cause is less important than it should be under the principles of tort law. Finally, frictions and opportunisms are motivating factors for filing cases against independent auditors.

Research, Malpractice, Parties to actions

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Independent auditor litigation: recent events and related research

Article Abstract:

The litigation problems of independent auditors have not yet ended even though they have achieved some judicial and tort reform victories. The long-term effect of these victories are uncertain. Moreover, the evolutionary characteristic of the law and the possible circumvention of the Reform Act by the plaintiffs or the courts would make it difficult to predict the course of litigation of public accountants in the future. However, the threat of litigation against independent auditors is also necessary to ensure against substandard auditing.

Laws, regulations and rules, Accounting, Accountants

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The threat of litigation and voluntary partner/manager turnover in Big Six firms

Article Abstract:

A close connection exists between the concern about litigation and the departure of partners and managers from the Big Six public accounting firms. The risks facing independent auditors resulting from the litigation, which include the legal requirement of making personal payments, prevent the Big Six firms from retaining the experienced accountants. Work pressure and less enjoyable work environment are also some of the negative effects of the litigations.

Social aspects, Management, Accounting firms, Accounting services, Government litigation

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