respective responsibility and potiential liabilities of management and suditors cncerning compliance with laws and regulations in audit of financial statements.

key concerns:

complaince with law and regulations

audit planning: consideration and plan procedure in detect non compliance

non-compliance : how and to whom should be reported  

withdraw: recognization and  recommendation

identify and establish procedure (remedy) in circumstance which indicated of high risk of error, irregulation and fraud

compare and contrast the responsibility of management and auditors for fraud and error

management:

auditors:

fraud： intentional act by one or more individuals among management, thise charge with governance, employees and third parties, involving the use of deception to obtain  an unjust illegal advantange

procedures to be carried up:

1. investigation

2. reporting non compliance

roles of auditors in ：

preventing:

detecting: we must conduct procedures to detect any material non compliance

reporting:

auditors legal liability :

negligent and potiential liability of auditors:

compare and contrast liability owed to customer and third parties(duty of care)

to customers:

to third parties: 

expection gap  and how to bridge

assess the risk of fraud in planing stage

legally liability:

contractural liability

or

test of negligence: was a duty owned, was the duty of care be breached, was there a loss suffered?

restricts:

restrick to usage of auditor report

engage letter, only share holders and the company only and no other part owned the duty of care

screening: assess the risk of fraud and not accepting clients with high risk

take  legal advice

respective reponsibilities and duty exxpectation gap

Issurance

carry out quality audit work

take on LLP(limited liability partnership)

Set a liability cap with clients