When is the auditor liable according to statutory law?

The auditor is liable according to statutory law under specific circumstances defined by law. This liability arises when auditors fail to adhere to the requirements set out in various regulations and standards that govern the accounting profession. These laws are designed to protect investors and the public by ensuring that audits are conducted with due diligence and integrity.

Statutory laws can specify situations where auditors have a duty to meet certain standards of care and can be held accountable if they do not. For example, if an auditor fails to follow Generally Accepted Auditing Standards (GAAS) or has knowledge of certain facts that could materially affect the financial statements and does not disclose them appropriately, they might face legal repercussions.

This legal framework exists to ensure accountability within the auditing profession, safeguarding investors and maintaining confidence in the financial reporting process.