What arguments can the auditor make to defend the audit

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Question - Your audit firm has audited Bright Ltd for several years and has always issued an unmodified opinion. This audit client recently discovered that its accounting software has a technical problem that consistently caused sales to be understated. This caused material understatements of sales in the income statement over the last few years. The audit client sues the auditor for negligence for not discovering this problem. The audit client claims that the company's share price would have been higher over the last few years if the auditor had detected the problem.

Required - What arguments can the auditor make to defend the audit firm against this lawsuit? Briefly explain. Cite common law cases where appropriate.

Reference no: EM132572766

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