The Ultramares doctrine established that auditor liability does not extend to third parties in cases involving ordinary negligence.

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The Ultramares doctrine, also known as the privity doctrine, holds that auditors are only liable for losses incurred by their clients and not third-party beneficiaries. This doctrine has been largely replaced in most jurisdictions by the foreseeability approach, which extends auditor liability to third parties who are foreseeable users of the audit report. However, the Ultramares doctrine established the principle that auditor liability does not ordinarily extend to third parties in cases involving ordinary negligence.

The Ultramares Doctrine Established That Auditor Liability Does Not Extend