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ACCA Strategic Professional · Advanced Audit and Assurance (International) · Professional liability

A firm's audit of Corvin Ltd is challenged as negligent. Which of the following would most likely be used by a court as the benchmark for judging whether the auditor breached the standard of care?

Courts judge breach against the standard of a reasonably skilled and competent auditor, using ISAs and professional guidance current at the time of the audit as key evidence. It is not the standard of the best auditor, nor does client satisfaction or firm profitability matter.

  1. AThe standard of a reasonably skilled and competent auditor, taking into account ISAs and professional guidance at the time of the auditCorrect
  2. BThe standard of the most experienced auditor in the largest firm
  3. CWhether the audit was profitable for the firm
  4. DWhether the client was satisfied with the audit report

Explanation

The test is the skill and care of a reasonably competent auditor, with compliance with ISAs and professional standards being strong evidence of the expected standard. Best-in-class practice is not required, and client satisfaction or firm profitability is not the test.

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