In the Caparo case, the court held that the auditor owes a duty of care to:
A)all users of the published financial report.
B)only those parties specified in the engagement letter.
C)the shareholders as a body, but not individual shareholders or third parties.
D)all shareholders, but not third parties.

Question

Quizplus · Accepted Answer

In the Caparo Industries plc v Dickman [1990] UKHL 2 case, the court held that auditors owe a duty of care primarily to the company itself, represented by its shareholders as a whole, rather than to individual shareholders or third parties. This established a more limited scope of duty, focusing on the collective interests of shareholders as a body.

In the Caparo Case, the Court Held That the Auditor