Acca aaa s21 Notes

September 2021 to June 2022 exams
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4. Conclusion
The courts have been reluctant to extend the concept of duty of care to third parties such as 
suppliers, lenders and potential investors. 
Auditors will have exercised sufficient professional care if:
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They keep up to date with current approaches to auditing.
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They apply ISAs and ethical standards and safeguards.
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They comply with the terms of the engagement letter.
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They apply an adequate system of quality control: assignment of staff, direction of staff, review 
of work.
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They undergo adequate supervision and education and training.
Since the Bannerman case it has become routine for audit firms in the UK to include a disclaimer 
clause in their reports. For example:
"This report is made solely to the company's members, as a body, in accordance with 
[Companies Act 2006]. Our audit work has been undertaken so that we might state to the 
company's members those matters we are required to state to them in an auditors report and 
for no other purpose. To the fullest extent permitted by law, we do not accept or assume 
responsibility to anyone other than the company and the company's members as a body, for 
our audit work, for this report, or for the opinions we have formed."
However, there is criticism of disclaimer clauses because they can be seen as devaluing the auditor's 
report:
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How can it be that the financial statements "present fairly ..." to the shareholders but to no one 
else?
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If the disclaimer clause reduces the chance of litigation, auditors might not take as much care 
whilst performing the audit.