The auditor's duty of reasonable care and skill and the expectation to detect fraud

Kujinga, Benjamin Tanyaradzwa

The auditor's duty of reasonable care and skill and the expectation to detect fraud

dc.contributor.author	Kujinga, Benjamin Tanyaradzwa	en
dc.date.accessioned	2026-07-29T09:35:06Z
dc.date.available	2026-07-29T09:35:06Z
dc.date.issued	2008	en
dc.description.abstract	Auditors perform a very important task within the context of the affairs of a company because financial reporting can only serve its purpose if stakeholders can rely on its accuracy and reliability. An auditor’s duty is to opine whether an entity’s financial reporting has been done according to the requirements of the law. The responsibility of reporting according to the law lies with an entity’s directors. Auditors cannot issue an absolute assurance as to the lawfulness and reliability of an entity’s financial reporting. However when it is subsequently discovered that the financial reporting was incorrect and that fraud has occurred auditors are often blamed and sued for enormous amounts of money for failing to detect material anomalies in the financial reports. These actions are based on the fact that auditors have a duty to exercise reasonable care and skill in the performance of their duties and through their failure to act as such, have caused financial harm to the clients or third parties. The fact that auditors are only required by law to exercise reasonable care and skill and perform an audit according to the standards of the reasonable auditor and not the most meticulous one, is often not regarded or is sometimes deliberately ignored. This clearly represents a problem in our law, namely that the presence of fraud in financial reports does not in itself suggest negligence on the part of the auditor but is apparently often perceived to do so. This research shows that the auditor’s duty of reasonable care and skill does not necessarily entail the duty to detect fraud. The elements of the duty of reasonable care and skill are identified from case law, legislation and international auditing standards. In order to limit the liability of auditors in general it is important to focus also on the elements of fault (negligence), wrongfulness and causation. This research shows that negligence cannot be established merely by the presence of fraud or material misstatements in financial statements. The responsibility for fair financial reporting lies with the directors. This research gives prominence to this fact which often seems to be ignored for convenience and in order to place the blame on the auditors. This research implicitly asks the question, why are auditors being held responsible for material misstatements in a company’s financial statements and not the directors? Guidelines for determining the extent of an auditor’s liability in this regard are formulated in this research.	en
dc.format	xiii, 160 leaves	en
dc.format	pdf	en
dc.identifier.citation	Kujinga, Benjamin Tanyaradzwa. 2008	en
dc.identifier.other	vital:11115	en
dc.identifier.other	http://hdl.handle.net/10353/104	en
dc.identifier.other	Auditing Standards	en
dc.identifier.other	Accounting fraud	en
dc.identifier.other	Financial statements -- Law and legislation	en
dc.identifier.uri	http://hdl.handle.net/20.500.11837/4269
dc.language.iso	English	en
dc.publisher	University of Fort Hare	en
dc.publisher	Faculty of Law	en
dc.rights	University of Fort Hare	en
dc.subject	Auditing Standards	en
dc.subject	Accounting fraud	en
dc.subject	Financial statements -- Law and legislation	en
dc.title	The auditor's duty of reasonable care and skill and the expectation to detect fraud	en
dc.title.alternative	The auditor's duty of reasonable care and skill and the expectation to detect fraud	en
dc.type	Thesis	en
dc.type	Masters	en
dc.type	LLM	en