Mars Ltd wished to acquire the ordinary shares of Saturn Ltd and engaged Sarah & Co. to audit the financial report of Saturn Ltd. Sarah & Co. failed to discover a significant liability when performing the audit. In a common law action
Against Sarah & Co., Mars Ltd, at a minimum, must prove:

Question

Quizplus · Accepted Answer

In a common law action against an auditor, negligence is the minimum requirement that needs to be proven. The auditor must have failed to fulfill their duty of care and skill expected of them as a professional auditor. Proof of fraud or knowledge of the liability by the auditor is not necessary, although it may strengthen the case against the auditor. Therefore, choice A is correct. Choices B, C, and D are incorrect.

Mars Ltd Wished to Acquire the Ordinary Shares of Saturn